Yes, it has been fixed for quite some time.
You might want to update xmem2 as well... there is some really cool goodness within it now that you can enable-- real preemptive multitasking with 16 separated 32KB work areas for malloc and stack.
What OS are you using? I know that it compiles fine on MacOS and Linux...
If you read in most of library sources, you'll see the following:
"IMPORTANT! PLEASE USE Arduino 1.0.5 or better!"
I forgot to add that in this one, and I will.