Right so I am unsure whether this is a bug. I describe it in the video description of a video of mine. Anyway, in previous versions of minecraft the player would load a 17x17 area of chunks around him.

This is no longer the case. The player loads chunks around him relative to his own/ the servers (in SMP) render distance. So if someone's render distance is on 2 he loads a tiny amount of chunks. Where as if his render distance is high the region of entity processing chunks is much larger.

I can't really show this in a picture but I have a "machine" which relies on chunk loading here:
http://www.youtube.com/watch?v=0RIhBavjljU
You can use this to recreate the bug also:

• Set your render distance to 10 first and go through a whole cycle.
  • You should have 1 ghast ball in the magazine at the end of the contraption.
• Now set your render distance to 4 and run through the process again.
  • You will see that the ghast ball stops before it gets to the contraption at the end.

Again this might be a new feature but if it is it would be nice to know the formula for calculating the size of the region of loaded chunks around the player...