There is a bug with WordPress where if you have “WordPress should correct invalidly nested XHTML automatically” enabled in your admin area, it doesn’t allow nested blockquotes (one inside the other) even though it’s valid code. Version 1.1 addresses the issue by removing any blockquotes from the quoted comment text if you have the above mentioned feature enabled.
If you have that feature enabled, you can snag the new version of the plugin on it’s homepage. Otherwise, there’s no real need to upgrade as this new version performs the same as the previous one. 😉