network-manager 0.6.5-0ubuntu11 broken

The difference is in the lines:
Sep 11 13:55:46 localhost NetworkManager: <info> SUP: sending command 'INTERFACE_ADD eth1^I^Iwext^I/var/run/wpa_supplicant2^I'
Sep 11 13:55:46 localhost NetworkManager: <info> SUP: response was 'FAIL'
(broken)

vs.

Sep 11 17:29:56 localhost NetworkManager: <info> SUP: sending command 'INTERFACE_ADD eth1^I^Iwext^I/var/run/wpa_supplicant^I'
Sep 11 17:29:56 localhost NetworkManager: <info> SUP: response was 'OK'
(working)

Reading the patches that went into 0.6.5-0ubuntu11, its probably 41t_nm_device_wireless_index_ctrl_sockets_by_run_count.patch thats causing the problems, more specifically the hunk:
@@ -2808,27 +2822,30 @@
                wpa_driver = "madwifi";
         else if (!strcmp (kernel_driver, "hostap_pci") || !strcmp (kernel_driver, "hostap_cs") || !strcmp (kernel_driver, "hostap_plx"))
                wpa_driver = "hostap";
        else
                wpa_driver = "wext";

        /* wpa_cli -g/var/run/wpa_supplicant-global interface_add eth1 "" wext /var/run/wpa_supplicant */
        if (!nm_utils_supplicant_request_with_check (ctrl, "OK", __func__, NULL,
- "INTERFACE_ADD %s\t\t%s\t" WPA_SUPPLICANT_CONTROL_SOCKET "\t", iface, wpa_driver))
+ "INTERFACE_ADD %s\t\t%s\t" WPA_SUPPLICANT_CONTROL_SOCKET "%d\t", iface, wpa_driver, self->priv->run_count))

Which seems to add an integer to the end of the command, making the path invalid (/var/run/wpa_supplicant exists on my system, /var/run/wpa_supplicant2 does not...)

I can confirm this. It happens since ubuntu11. I also have a ipw2200. Network is unusable.

Sep 11 17:42:34 localhost NetworkManager: <info> eth1: Device is fully-supported using driver 'ipw2200'.
Sep 11 17:42:34 localhost NetworkManager: <info> nm_device_init(): waiting for device's worker thread to start
Sep 11 17:42:34 localhost NetworkManager: <info> nm_device_init(): device's worker thread started, continuing.
Sep 11 17:42:34 localhost NetworkManager: <info> Now managing wireless (802.11) device 'eth1'.
Sep 11 17:42:34 localhost NetworkManager: <info> Deactivating device eth1.
Sep 11 17:42:34 localhost NetworkManager: <info> eth0: Device is fully-supported using driver 'tg3'.
Sep 11 17:42:34 localhost NetworkManager: <info> nm_device_init(): waiting for device's worker thread to start
Sep 11 17:42:34 localhost NetworkManager: <info> nm_device_init(): device's worker thread started, continuing.
Sep 11 17:42:34 localhost NetworkManager: <info> Now managing wired Ethernet (802.3) device 'eth0'.
Sep 11 17:42:34 localhost NetworkManager: <info> Deactivating device eth0.
Sep 11 17:42:34 localhost NetworkManager: <info> Device list recreated successfully.
Sep 11 17:42:44 localhost NetworkManager: <info> SWITCH: no current connection, found better connection 'eth1'.
Sep 11 17:42:44 localhost NetworkManager: <info> Will activate connection 'eth1/blubb2'.
Sep 11 17:42:44 localhost NetworkManager: <info> Device eth1 activation scheduled...
Sep 11 17:42:44 localhost NetworkManager: <info> Activation (eth1) started...
Sep 11 17:42:44 localhost NetworkManager: <info> Activation (eth1) Stage 1 of 5 (Device Prepare) scheduled...
Sep 11 17:42:44 localhost NetworkManager: <info> Activation (eth1) Stage 1 of 5 (Device Prepare) started...
Sep 11 17:42:44 localhost NetworkManager: <info> Activation (eth1) Stage 2 of 5 (Device Configure) scheduled...
Sep 11 17:42:44 localhost NetworkManager: <info> Activation (eth1) Stage 1 of 5 (Device Prepare) complete.
Sep 11 17:42:44 localhost NetworkManager: <info> Activation (eth1) Stage 2 of 5 (Device Configure) starting...
Sep 11 17:42:44 localhost NetworkManager: <info> Activation (eth1/wireless): access point 'blubb2' is encrypted, but NO valid key exists. New key needed.
Sep 11 17:42:44 localhost NetworkManager: <info> Activation (eth1) New wireless user key requested for network 'blubb2'.
Sep 11 17:42:44 localhost NetworkManager: <info> Activation (eth1) Stage 2 of 5 (Device Configure) complete.
Sep 11 17:42:47 localhost NetworkManager: <info> Activation (eth1) New wireless user key for network 'blubb2' received.
Sep 11 17:42:47 localhost NetworkManager: <info> Activation (eth1) Stage 1 of 5 (Device Prepare) scheduled...
Sep 11 17:42:47 localhost NetworkManager: <info> Activation (eth1) Stage 1 of 5 (Device Prepare) started...
Sep 11 17:42:47 localhost NetworkManager: <info> Activation (eth1) Stage 2 of 5 (Device Configure) scheduled...
Sep 11 17:42:47 localhost NetworkManager: <info> Activation (eth1) Stage 1 of 5 (Device Prepare) complete.
Sep 11 17:42:47 localhost NetworkManager: <info> Activation (eth1) Stage 2 of 5 (Device Configure) starting...
Sep 1...

Probably importance of this bug should be set to 'high' since it may make updates unavailable to those users who don't know how to configure their network from console with wireless tools.

Also, it would be advisable to make everyone 'downgrade' to 0.6.5-0ubuntu10 in the meanwhile, so that the b0rken update doesn't reach too many people.

Network manager leaves the card in a state where it is not easily usable with iwconfig. It won't connect to the network even if it is configured with iwconfig.

You have to deactivate roaming mode, then reboot, then manually configure with iwconfig.