Weakness of MD5 and SHA-1 - cause for worry?

It appears that a collision has been found for MD5. The MD5CRK Project has been closed down since the report from some researchers in China was published. There are unconfirmed rumors of results against SHA-1. But it is not the end of the world. Bruce Schneier has some perspectives on what the discovery of weaknesses of these hash functions means:

To a user of cryptographic systems -- as I assume most readers are -- this news is important, but not particularly worrisome. MD5 and SHA aren't suddenly insecure. No one is going to be breaking digital signatures or reading encrypted messages anytime soon with these techniques. The electronic world is no less secure after these announcements than it was before.

But there's an old saying inside the NSA: "Attacks always get better; they never get worse." These techniques will continue to improve, and probably someday there will be practical attacks based on these techniques.

It's time for us all to migrate away from SHA-1.

Newer schemes and protocols will certainly use stronger hash functions, with more bits and (hopefully) better security properties.