I don't think I have a fix for this, but I've found a workaround for my site (this will only work if you don't display start/end times in the listings. I don't on my site: http://bourbontheatre.com/)
Although I tried the suggested edit to the php file mentioned above, it didn't really work so my php file is back to how it was originally.
Here's what I have to do: When an item drops off the upcoming events list on the day it's actually taking place, I just change it from an all day event and set a time for that night, even if it's a day event. I've started doing this for all new events and it seems to work. For instance, if I have an event that starts at 2pm, I'll just put in a start time of 8pm or so and an end time of 11:55 or something. It works with all-day events as well.
I assume there's a fix for this in the paid version and am not holding my breath for the developers to throw us a bone. However, if a developer happens to see this, please be aware that assuring us you've fixed this and maybe other issues would definitely make us lean towards purchasing your new version. In fact, I'm putting together a site next week that needs a similar plugin but I might try something else due to this problem. Please respond to this thread with either "Yes, this is absolutely, positively fixed in the new version" or maybe "Sorry, no dice." Should we take your silence as meaning the latter is the case?