Aha... was hoping for a fix from the author, but that does not seem to be the case. Still, easy work around for the 1.1 bug of resetting prefs... lock the pref file. To do that: go to your home directory, open your "Preferences" folder and Get Info on "com.schartworks.The_Unread.plist". Click the locked check box and all should be good.

Of course, if you want to make changes to your prefs, you will have to unlock this file... so make sure your prefs are how you want them before you lock it.

Has been working for me.