I have been running 1.2-BETA-2 since early last week and all seems
great.  I just upgraded two test boxes (with pre-configured & working
IPSec tunnels) to the latest 1.2-BETA-2 SNAP and it severely broke
IPSec. 

        racoon.conf: 

        path pre_shared_key "/var/etc/psk.txt";
 path certificate  "/var/etc";
 remote 63.63.63.63{
         exchange_mode main;
         my_identifier address "63.63.63.64";
         peers_identifier address 63.63.63.63;
         initial_contact on;
         support_proxy on;
         proposal_check obey;
         proposal {
                 encryption_algorithm rijndael 256;
                 hash_algorithm sha1;
                 authentication_method pre_shared_key;
                 dh_group 5;
                 lifetime time 28800 secs;
         }
         lifetime time 28800 secs;
 }
 sainfo address 192.168.168.0/24 any address 10.10.10.0/24any {
         encryption_algorithm rijndael 256;
         authentication_algorithm hmac_sha1;
         compression_algorithm deflate;
         pfs_group 5;
         lifetime time 3600 secs;
 } 

        I have recently switched my test tunnels to rijndael 256 w/ SHA1
.... everythings works great when I downgraded back to the original
1.2-BETA-2.

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