Is there a way to fix the sms notification in Galaxy S2, ICS
I didn't see this issue on a custom ROM - is it an issue with the stock Samsung ROM?

I would suggest you find out - and if you really want to get rid of it, install a custom ROM onto your phone after rooting - I find Sapir's CM10 ROM to work well, and I do not see this issue.

Please check http://forum.xda-developers.com for more info on rooting and installing custom ROM's to your device.