You may need to upgrade the bootloader on your boards. If you have access to an AVR-ISP or a parallel port programmer, you can use the Tools | Burn Bootloader menu item to do this. Otherwise, you'll need to change an option in your preferences file so that Arduino 0004 will correctly handle the older bootloader.
When you reset the board, does it blink three times or flicker briefly? If the former, you may have a older bootloader that takes up 2 Kb of the 8 Kb of program space (flash) on the ATmega8 instead of the 1 Kb used by the current bootloader. When uploading your sketch, Arduino 0004 checks if it's too big for the ATmega8, but it basis its calculation on a 1 Kb bootloader. If yours is bigger, only part of the sketch will be uploaded, but the software won't know, and your board will continually reset, pause, reset. You can tell the Arduino environment the amount of space available for sketches by editing the upload.maximum_size variable in your preferences file (see: http://www.arduino.cc/en/Main/Preferences
for instructions on finding the file). Change 7168 to 6144, and the environment should correctly warn you when your sketch is too big.
If you need the extra space and can't burn the smaller bootloader, you may need to continue using Arduino 0003. Reducing the size of the core libraries (so your sketches can be bigger) is one of the top priorities for Arduino 0005.