Rated 4 out of 5 stars

Latest version deleted almost all my Firefox passwords. To avoid deletion I had to close the wallet, then restore a backup than open the wallet again. Nevertheless, it doesn't work. I had to go back to version 0.4. I'm running Firefox 3.6.4 64bit Ubuntu Lucid Lynx 10.04 beta 2.

This review is for a previous version of the add-on (0.6). 

Check "Form Data" and "Passwords" folders

This version uses 3 different folders to store passwords, because it tries to keep as much compatibility as possible with native apps. Prior to version 0.6, this add-on just used it's own Folder to store passwords.
The Firefox folder format for version 0.6 is compatible with earlier versions of this add-on. So, you shouldn't need to export/import from older versions.
New passwords are stored either in the "Form Data" or "Passwords" folder depending on the type of password. Passwords from these folders are also read by Konqueror and friends. But both these folders have their limitations. So, when the new password does not fit, it is stored in the Firefox folder.
And last, when Firefox finds a password in the Firefox folder, it tries to move it to the other folders, in order to make them compatible with Konqueror. So, seeing that the Firefox folder decreases it size is a sign that a password have been made compatible (it should be in one of the other folders).
Please check if it is actually bad behavior (like forgetting passwords), because it should be a bug! and let me know.