While frivolous lawsuits are certainly a problem, I think everyone citing the McDonald's coffee example should watch the documentary Hot Coffee. It puts that incident in a new perspective.
The coffee's temperature met McDonald's policy. They set it higher than their competitors because they assumed people would keep it in a cup holder and want it to be a more drinkable temperature when they arrived at their destination. Today, McDonald's has not changed their policy and still serves coffee at 80-90C, and places like Starbucks serve it at similar or higher temperatures. They are able to do this because of better packaging that's less likely to spill the entire drink even if it's dropped on your lap like Liebeck did.
http://en.wikipedia.org/wiki/Liebeck_v._McDonald's_Restauran...
Personally, I don't think that it was a frivolous lawsuit. She did receive serious burns, more serious than I would expect someone to receive from spilled coffee.