With kernel 2.6.39-2, I can replicate the problems described here (i.e. hciconfig up reports error "Invalid argument (22)"). With kernel 2.6.32-5, this used to work. With kernel 3.0.0-1 (package linux-image-3.0.0-1-686-pae, version 3.0.0-1), it works again. So the bug appears to have been fixed in 3.0.0-1.