I haven't been using my U3 stick for quite some time (pre Linux 3.0), before this it ran perfectly.
However, recent updates makes the sg subsystem incompatible with u3-tool, I haven't been able to pinpoint the exact reason but I can confirm it to be working on 2.6.39 at least. So somewhere in between now (3.2.4) and then.
The solution I took to at least unlock my stick for now was to force the usage of libusb, the configure script for this however seems broken and I was forced to do a manual compilation in ./src/;
gcc -lusb -g -O2 -o u3-tool u3_tool-display_progress.o u3_tool-main.o u3_tool-md5.o u3_tool-secure_input.o u3_tool-u3_commands.o u3_tool-u3_error.o u3_tool-u3_scsi_usb.o u3_tool-u3_scsi_spt.o u3_tool-u3_scsi_sg.o
modprobe -r usb-storage
./u3-tool -u scan
This works for now, I'll be back when i've pinpointed the exact reason for not properly sending identifying the U3 subsystem.