Audiobook files do not play correctly in iOS 5
I had a similar issue with the default music app and the Steve Jobs biography audiobook (ironically).

I had to manually delete the audiobook from my device by checking the box for Manually manage music and videos in iTunes, then delete the files, then re-add them again.

Have a look at the audiobook entries under your device in iTunes - mine had a sync icon next to them as if to indicate that the problem was getting them onto the device, rather than with the player itself.

I haven't yet tried to uncheck the box for Manually manage music and videos for fear of breaking the audiobook again.