I have tried tweaking my settings, they are currently set up like this:

jabber id: full.username@gmail.com
password: (actual password - triple checked that it was entered correctly)
server: talk.google.com
expose presence: checked
acceptance mode: accept_all
bot command prefix: !

all others are left blank. (My hudson server lives inside the VPN and doesn't have user auth turned on, so I don't have a hudson username / password)

It was working before with version 1.5 - but I was having an issue where after a day or so the jabber connection would die and not be reconnected so I was hoping updating to 1.7 with the new smack library would fix that (or at least have it reconnect when it died)

Here's what I'm getting in my log when it tries to connect:

Mar 22, 2010 9:45:19 AM hudson.plugins.jabber.im.transport.JabberIMConnection connect
WARNING: SASL authentication failed using mechanism PLAIN:
at org.jivesoftware.smack.SASLAuthentication.authenticate(SASLAuthentication.java:325)
at org.jivesoftware.smack.XMPPConnection.login(XMPPConnection.java:395)
at hudson.plugins.jabber.im.transport.JabberIMConnection.createConnection(JabberIMConnection.java:225)
at hudson.plugins.jabber.im.transport.JabberIMConnection.connect(JabberIMConnection.java:121)
at hudson.plugins.jabber.im.transport.JabberIMConnectionProvider.createConnection(JabberIMConnectionProvider.java:42)
at hudson.plugins.im.IMConnectionProvider.currentConnection(IMConnectionProvider.java:44)
at hudson.plugins.im.HudsonIsBusyListener.setStatus(HudsonIsBusyListener.java:110)
at hudson.plugins.im.HudsonIsBusyListener.updateIMStatus(HudsonIsBusyListener.java:101)
at hudson.plugins.im.HudsonIsBusyListener.access$000(HudsonIsBusyListener.java:18)
at hudson.plugins.im.HudsonIsBusyListener$1.run(HudsonIsBusyListener.java:33)
at java.util.concurrent.Executors$RunnableAdapter.call(Executors.java:441)
at java.util.concurrent.FutureTask$Sync.innerRunAndReset(FutureTask.java:317)
at java.util.concurrent.FutureTask.runAndReset(FutureTask.java:150)
at java.util.concurrent.ScheduledThreadPoolExecutor$ScheduledFutureTask.access$101(ScheduledThreadPoolExecutor.java:98)
at java.util.concurrent.ScheduledThreadPoolExecutor$ScheduledFutureTask.runPeriodic(ScheduledThreadPoolExecutor.java:181)
at java.util.concurrent.ScheduledThreadPoolExecutor$ScheduledFutureTask.run(ScheduledThreadPoolExecutor.java:205)
at java.util.concurrent.ThreadPoolExecutor$Worker.runTask(ThreadPoolExecutor.java:886)
at java.util.concurrent.ThreadPoolExecutor$Worker.run(ThreadPoolExecutor.java:908)
at java.lang.Thread.run(Thread.java:637)

On a plus side, it happens pretty regularly - so if I can just get it to log in it seems like the problem I had before where it would just die might be taken care of since it seems to keep trying to reconnect when it doesn't have a connection.