We have several projects that were started in Unity 2.1 and 2.6 that uses the Character Controller moving avatars and enemies over Mesh Collider ground and objects, all work well. Since updating to 3.1, if any are touching or slightly penetrating the ground or object, they fall right through. To compensate. I have moved all of their start locations up .005 to .01 on the y-axis. That works for some, however doing a moveto a specific location to on an object with a mesh collider, it falls through again.
What changed with the Physics or Character Controller to cause this issue and how can we get around it.