I have put this in the trac:
http://trac.mu.wordpress.org/ticket/355
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Basically, in wp-includes/functions.php, within the function get_option()
The following line 224 and 225 were commented out by default.
#wp_cache_delete('notoptions', 'options'); #wp_cache_delete('alloptions', 'options');
You need to uncomment these two lines. Otherwise, when a new blog is created, the "siteurl", "home", "blogname" options will be inserted TWICE!
To repeat the issue, simply install a fresh 1.2.2 and create a new blog. Visit the home page and you will see "My Weblog" as the name for the new blog instead of whatever you set when signing up.
Uncommenting the above two lines will do the trick, but I don't know why Donncha left the two lines commented out by default. Any comments?