I can confirm that this affects Jaunty and now Karmic too. I could not connect to the U of I VPN until I removed "require-mppe" via opening gconf and going to system->networking->connections->1->vpn. I right clicked "require-mppe" and selected "Unset Key". After this the VPN worked. I would suggest modifying network manager to not set "require-mppe" if there is "require-mppe-128" selected.
I can confirm that this affects Jaunty and now Karmic too. I could not connect to the U of I VPN until I removed "require-mppe" via opening gconf and going to system- >networking- >connections- >1->vpn. I right clicked "require-mppe" and selected "Unset Key". After this the VPN worked. I would suggest modifying network manager to not set "require-mppe" if there is "require-mppe-128" selected.