I have the same problem, where can I get a copy of the older version. Its not apparent on the SimplePie site.
I am suffering from exactly the same problem! Its very frustrating I have to say. The only thing that works is manually adding in <p> tags. As far as I am aware, this is a standard installation and I am modifying the Classic theme. The only plugin I have added is a search plugin which allows you to add a title to the widget.
Any ideas?? Is there somthing I am missing somewhere?
