I just noticed that you can still download an older version of Spotify on the app store, called "Spotify for iOS 4". I'm using it, and it doesn't have the problem (I'm running iOS 5.1.1 on my iPhone 4). At least this is some kind of temporary pacification until they fix the issue in the current version of the app.
Hey David. Thanks for posting to let us know we're not being ignored. The problem is I paid $9.99 twice and haven't used it much because I've been using Rhapsody instead. I'm not sure I want to pay again and have this problem persist for another month.
Suspend your Spotify account so it's not charging you, but keep the app on your phone so you'll be notified of updates. When one is released with a fix to this problem, just reactivate your paid account.
I now have both side by side. Did nothing but install Spotify for iOS 4 and logged in. Chose NO on "Upgrade because we detected you're running iOS5?(paraphrase)". Also, modifed my quality settings to High in options.
My Spotify acct. expires today so I guess this is my last post here. I am now a Mog user and it is hands down better than Spotify. Thank you Spotify for not fixing your app so I could discover the wonderfull Mog service.