Firmware update to the 8u2 chip fixed this. Everybody that hit this issue should donate to Dean Camera's Pledgie fund via the LUFA project page at: http://www.fourwalledcubicle.com/LUFA.php
Here's his tweet with the link to the github page that hosts the new firmware:
The procedure to fix is detailed in:
http://www.arduino.cc/cgi-bin/yabb2/YaBB.pl?num=1286088093/34#34