based on all the problems everyone is having with 10.6.3, would think that the update is the problem. If you used the built in software update to install 10.6.3, then suggest download the combo update from apple's website and re-install.
Some have reported success by using combo updates after problems with delta update. I always do combo updates and so far no problems.
Had the same problem, and after first checking the system prefs and rebooting I solved it in the simplest way possible.
1. Carefully inserted the headphones, which made the volume show as normal again.
2. Then very gently unplugged the headphones. The volume is back to normal.
So it must be a sensor that got a bit stuck inside the headphone jack, which is why the toothpick trick may work for some.