Updated to NM 0.7~~svn20080928t225540+eni0-0ubuntu2 and rebooted. Upon login it 
asked for my WEP key again so I entered it. :(
Then I rebooted again and logged back in and hey presto! I was connected 
without having to re-enter my WEP key. It seems that entering the key one more 
time after updating, has re-saved the key.
Woohoo! :)
Confirmed as fixed for me.

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Network Manager does not remember WEP/WPA key
https://bugs.launchpad.net/bugs/36651
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