Yes, it is mainly an annoyance hack. As stated before, it is an attempt to redirect users elsewhere. The way to fix it is simple; remove the issue directly from the files on the server, change your server passwords (really just ftp should be sufficient enough but is best to change all just in case), fetch files through Google to ensure no cloaking has been done to the website, and finally submit for reconsideration to Google to get off the suspicious list. Even if you remove the threat from the site, Google will still label the website as suspicious until you go through the reconsideration.
It would also be wise for the person who regularly access the ftp to do a deep scan of their own computer(s) to ensure that their machines were not compromised otherwise it will end up a vicious cycle.
Also for the people who don’t see the error or did see it but no longer can, it doesn’t mean it went away. The way this particular type of hack normally works is that new users are mostly affected rather than current. Basically if your cookies are saved there is less of a chance for you to repetitively see the annoyance but if you were to clear your cookies and revisit the site, the problem would be more likely to appear for you.
Sorry if this turns out to be a wall of text. For whatever reason the message box will not let me [return] to a new line to properly paragraph my posts.