I'm definitely having this problem too, although I'm certain that I received <i>some</i> e-mails using 2.07 before WordPress stopped working for me. According to my mail logs, I'm now getting this error:
smtp server didn't accept RCPT To: command, replied "550 mail from 220.127.116.11 rejected: administrative prohibition".
Now, I'm almost sure that this is because of something my host changed during the past couple of days -- incidentally, one of my WordPress blogs went down this morning (and is still down) because the database server is now inaccessible (except, for some reason, from phpMyAdmin) :( -- but is there anything that I can do to get around the e-mail problem? Any assistance will be greatly appreciated.