I had this working before WP 3.0 and enabling multisite. Kinda wish I'd known that it wasn't going to be multisite compatible, or I wouldn't have enabled the network. Now other people have blogs at my site and I can't go back!
Anyway here's how to update your sitemap.xml manually until the plugin becomes fully 3.0 compatible. Hopefully this will help those of you in my same predicament:
1. Download the last file generated by the plugin, sitemap.xml from your root directory.
2. Open with Notepad (in Windows)
3. Copy the first url block of code where the URL links to your last blog post, such as http://www.yoururl.com/last-blog-post/. Be sure to copy all lines between the two URL tags, including the loc, lastmod, changefreq, and priority code lines.
4. Paste it just below your main URL location at the top of the list, meaning http://www.yoururl.com/ according to the example above.
5. Copy the URL of your last blog post and replace the url in the copied loc line.
6. Modify the lastmod line of code to match the date and time that your newest blog post was published.
7. Save and overwrite the file on your server.
8. Login to your Google account, Web Master Tools, click on the site and click on the sitemap.xml link.
9. Below the last date submit, click "Resubmit." Repeat this process for any other major search engine you desire.
10. Painful yes, but you get used to it. At least this will keep your blog current in Google search results until the plugin is updated.