I tried the karmic daily-build live cd from today and have a similar problem 
with network-manager 0.7.996. Unfortunately I can't use ubuntu-bug because I 
have no network at all when the error occurs.
It seems that the wifi stick connects to the access point but fails to obtain 
an ip address. Find attached some files I got from the live environment.

** Attachment added: "dmesg output when connecting to ap"
   http://launchpadlibrarian.net/34568529/dmesg

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Latest karmic networkmanager update breaks wifi
https://bugs.launchpad.net/bugs/453099
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