Magento 1.6 seems to contain a bug that infinitly escapes dropdown and multiselect attribute values.
For you as the end user this means that when you add an option like “M&M” Magento will escape this to “M&M” on this first save. When you open the attribute you will see “M&M”. However when you save it again, Magento will escape it once more to “M&M” and it will keep adding for each save you do.
This means your users will get weird values in their layered navigation and so on.
A bug report is filed here:
http://www.magentocommerce.com/bug-tracking/issue?issue=12699
A quick fix is to comment out line 164 to 171 of app/code/core/Mage/Adminhtml/controllers/Catalog/Product/AttributeController.php.
If the bug is not fixed when a new version of Magento is released, you will have to make a patch or move the code to local (or just comment these lines out again).
An even better fix by the way would be to unescape the options before displaying them. Will get back to you on how doing that later.