No you are not nuts there really is a problem with custom fields in WordPress 3.4.2. If you have just updated to current latest version of WordPress 3.4.2 and have found out that the custom fields are not updating and are broken – you are not alone. Its happening for everybody. Its a known bug for WordPress 3.4.2. Here we have a quick fix before WordPress 3.4.3 (or 3.5) arrives. WordPress developers are aware of the bug (http://core.trac.wordpress.org/ticket/21829). The next milestone version will be WordPress 3.5 but since this is a critical bug its already fixed in rev.21780 so it could be released early on 3.4.3 but we just don’t know when is that going to happen.
Until then you can use WordPress hotfix plugin that will take care of this bug:
All you need to do is install it in your WordPress. Login to wp-admin and go to Plugins -> Add New in search box enter hotfix and install the first plugin from the results list (plugin Version 0.9, plugin author: Mark Jaquith). That’s it!