The truth is this: The risk of traveling in India is no different today than it was this time last week, before the attacks. If anything, this will cause changes that will make it safer to travel and live in India, both for Westerners and for Indians.
I agree, though the emotional impact of watching the Taj Hotel burning is tough to get over.
All that said and done, the CIA's latest travel advisory urges caution, but stops short of advising curtailment of travel. This is quoted from the CIA's 11/28/08 advisory (that expires on 12/31/08).
Americans throughout India should be vigilant about security at all times. The Embassy and Consulates are actively assessing the countrywide security environment. Americans are advised to monitor local news reports, vary their routes and times in carrying out daily activities, and consider the level of security present when visiting public places, including religious sites, or hotels, restaurants, entertainment and recreation venues. If unattended packages are spotted, American citizens should immediately exit the area and report the packages to authorities.
Good advice for troubled times...