It lives in MobileSafari and affects, among other things, how PDF files are handled; this was fixed in iOS 8.
Robert Lemos posted on ArsTechnica this morning: Can’t upgrade to iOS 8? Beware bugs in the system.
However, it’s probably not a total disaster, as one of the security experts quoted in the article states:
…“So it might be that this vulnerability alone, may not be enough to infect the phone with malware, unless you combine it with other exploits,” Hirvonen said.…
