Yes - thanks a lot! After spending hours trying to program my Attiny85, it now works perfectly.
You are welcome. I'm glad you found this thread.
And without any capacitor between reset and ground.
It works better with the capacitor (~ one second faster uploads).
I wish this info was more readily available so people could stop wasting time making it work. I installed the IDE recently, why isn't the ArduinoISP updated with your (or another working) version?
I have asked (more than once) for the ArduinoISP sketch to be fixed. I suspect they don't believe me that the problem persists.
At this point, you will have to ask the folks in charge. The Developers List is a reasonable contact method...
http://arduino.cc/mailman/listinfo/developers_arduino.ccAND/OR, You can try creating an issue...
https://github.com/arduino/Arduino/issuesPS. Is there a solution to the heartbeat problem? I really like that function

Change the heartbeat code to blink-without-delay.
I use this; it's much bigger but it has lots of goodies...
https://github.com/Coding-Badly/TinyISP