Dengue fever is endemic in Brazil and each year it reaches epidemic proportions. In 2008, dengue fever is being felt in earnest in Rio de Janeiro, where the epidemic is particularly virulent this year. From the beginning of 2008, and only in the capital, there have been more than 50.000 cases of the disease with 51 people dying as a result. In the whole of the Rio de Janeiro state, more than 75.000 cases and 83 deaths [figures updated on April 15]. The public health system has collapsed and health assistance is precarious. The army has been sent it and field hospitals have been set up.
Most cases are concentrated around the capital, Rio de Janeiro. Of all the main tourist destinations on the state of Rio, only Angra dos Reis should be avoided at all costs, as the outbreak is quite virulent there as well. Paraty, Ilha Grande, Búzios, Cabo Frio and Arraial do Cabo are ok.
The situation is not likely to improve until the end of the rainy season, between June and July. You are strongly advise to reconsider a trip to Rio de Janeiro (the city) until the situation has improved considerably. The fact that famous (and wealthy) people have caught dengue fever in the city should give an indication of the size of the problem.
For more information, you are advised to read the post I wrote a few weeks ago: 10 facts about dengue fever in Brazil