I've got the same problem. I did find that when you're editing or adding a blog entry, if you switch the view of the Summary editor box over to "basic text box" instead of the default rich text editor, there is some HTML in there: a paragraph tag with a character code 160 (the nonblank space) in it.

<p>#0160;</p>

If you clear that, then the auto-summary will work. Unfortunately you have to re-clear that any time you edit the entry, as it will open the editor back in rich-text mode and insert that code again.

If there's a better fix, I'd love to hear it myself. Until then, this is cludgy but will work.

I confirm this has been fixed in v4.0 which is currently in Beta (and based on my testing is looking fantastic).