Yesterday I had a fully working multi-site with subdomains and all was good with the world. I updated to WordPress 3.4.1 and all the folders disappeared from my blogs.dir folder. They still showed up in the Network admin under the sites listing, and in the database but no where else.
deactivated all plug-ins for both network and the main site,
re-wrote the .htaccess to the bare necessities according to the codex and Network settings in the admin panel,
made sure the permissions for the folder blogs.dr were set to 755,
Checked the wp-config to make sure all was well there,
did a clean install of WordPress 3.4.1 both using the update and downloading the zip file and re-installing,
and still no joy.
I can create new sites all day long they will show up on the Network admin and in the database but not in the blogs.dir. When I try to access the site or the dashboard I get a "cannot find site..." error.
Contacted the host and their solution is to restore from the back-up while this is possible and only a bit annoying I would rather just fix the problem.