WEP broken in iPhone 1.0.1 software update?

Richard and I were just playing with a wifi router, and my iPhone, still on 1.0.0 connected using WEP just fine, and his phone connected yesterday before the update.

After applying 1.0.1, he was no longer able to authenticate using WEP, even after we changed the wifi channel, password, and SSID.

Once we switched to WPA2, the iPhone was able to connect again.

However, if this is true, this is pretty damn bad.

Have any of you who updated to 1.0.1 been able to connect using straight WEP?

I'm holding back on the update till it gets vetted a little better, methinks.