Due to a bug in crypt(), PHP.net is recommending that you not updgrade to PHP version 5.3.7, but instead wait for 5.3.8 to be released.
Description: ------------ If crypt() is executed with MD5 salts, the return value conists of the salt only. DES and BLOWFISH salts work as expected.
[...] 2011-08-22: See this post about a bug in crypt() in 5.3.7. PHP.net is recommending that you not upgrade to 5.3.7, but instead wait for [...]