Google has been labeling the search results that are affected with Malware since 2007.
Last Friday, Matt Cutts of Google announced on the Google Webmaster Central blog that Google is now labeling sites in the search results that appear to have been hacked and compromised.
The label for a hacked site will say, "this site may be compromised" and it would link over to this page on Google. The page describes why the message is there and how the webmaster can remove it.
Google is labeling sites not just with malware but also that are hacked. Now, not all sites that are hacked have malware, but most sites that have malware are hacked. So a hacked site might lead to malware, which is more harmful that just a hacked site. Also hacked sites might contain lots of links without the webmaster knowing, which may cause a spam penalty in Google.