Craft 2.3 new User does not set the default permissions group
The setting still works, but keep in mind that for it to take effect, A) you have to be registering a user through a custom registration form on the front end, and B) you have to be logged out. Without those conditions, it’s not technically public registration.

Default user group assignment has always taken place after the user was saved, and after the users.onSaveUser event was called. See these highlighted lines from UsersController::actionSaveUser() – the onSaveUser event gets called by craft()-&gt;request-&gt;saveUser(), and default group assignment happens in $this-&gt;_assignDefaultGroupToUser().