The cruise missile attack by Hezbollah on the Israeli Saar 5 corvette this week threatens the entire Israeli Navy with obsolesence. Other bloggers have discussed the missile. It has a range of about 50 miles, can be launched from a truck and by all rights should have sunk the corvette if its warhead hadn't been a dud. This is just a guess, but I would bet that the corvette costs on the order of $100M fully equipped. That's a lot of money to lose from a single truck-launched cruise missile.
CDR Salamander has a timely post that suggests that the Saar 5's Close In Weapon System (CIWS) was not turned on due to the presence of friendly air assets in the area and the concern that the CIWS would shoot down Israeli aircraft.
The consensus is that the Saar 5 should have been able to stop this threat cold. It's designed to do so. I've got another question. What will the Israeli Navy do when Hezbollah launches shore-based torpedoes? If they've got one, it's not unreasonable to think they've got the other.