Power control widget auto rotate toggle issue
I was wrong about the setting, it wasn't the auto rotate button. Power control widget doesn't have auto rotate, just Wifi - BT - GPS - Sync - Brightness.

From http://code.google.com/p/android/issues/detail?id=42405 :

What you consider to be the auto-rotate toggle, is the button to switch the sync!
It will switch whether your device will sync in background or not.