Vim 7.4 was released yesterday, and as it's not in any repos yet and there's no PPA available, our only option is to install it from source.

First, we make sure that all of our dependencies are available

sudo apt-get install mercurial build-essential ncurses-dev

Then, we clone the latest source

hg clone https://vim.googlecode.com/hg/ vim

And we build it with all of the features we can

cd vim/src
make distclean
./configure --with-features=huge --enable-pythoninterp --enable-rubyinterp
make
sudo make install

It'll be installed into /usr/local/bin/vim. You can check the version using:

/usr/local/bin/vim --version

Add it to your path with:

export PATH=/usr/local/bin:$PATH

Then just type vim to start using it.