You shouldn't install Java unless you absolutely need to, as it is notorious for opening up gaping security holes in your computer. Is there a program or website you use on a regular basis that requires it?
This is true for Java applets in web browsers, but Java apps that are not browser-based applets are generally fine and don't necessarily open up gaping holes. That said, any app that I use that is Java based (the finance app Moneydance and the backup app Crashplan) includes its own JRE as part of that app package.
I keep the Java plugin turned off but there are occasional web sites that I use (thankfully, very infrequently) that frustratingly still use Java applets, so I turn it on just before I use those sites and ten turn it right back off. And Safari also prompts you before running applets on a site, and you can even set the plugin off for any site that asks for it if you like.