If you completely want to disable Java Update (which is especially useful on Remote Desktop Servers), you have make a few adjustments to the registry.
EDIT (2015-05-29): this method is depecrated, and only applies to Java 1.6 on Windows XP or older. Only the alternate method is still valid as this prevents the updater program from running.
To disable Java Update, navigate to the key (32-bit and 64-bit differs):
Find the value EnableJavaUpdate and set it to 0. This will disable Java Update in the Control Panel.
To prevent the update checker from running by deleting the key:
Again, note the difference if you're running 32 or 64-bit.