I'm using version 3.2.4 of the plugin on WP 3.0.2.
My permalink structure is "/%category%/%postname%/".
From time to time, Webmaster Tools shows crawling errors for posts and pages without any category in their name, i.e. "www.ronitbaras.com/post1/" instead of "www.ronitbaras.com/cat1/post1/", which is incorrect.
When I rebuild the sitemap manually, the result is correct, but then I post and everything gets messed up again.
The gzipped version also opened (on Windows XP) to an unreadable binary file, although I generally have no problems with gzipped files, so I've turned compression off.
The debug function shows this message:
Warning: htmlspecialchars() expects parameter 1 to be string, array given in [path snipped]/wp-content/plugins/google-sitemap-generator/sitemap-ui.php on line 124
@Arne, if there's any other information you need for a solution, please let me know and I'll post it.