FYI, just spooled up v1.10b7 and email alerts are working OK for me.
I did notice that my settings didn't save the first time for some odd reason, but when I re-entered them, they worked fine. (I then restarted the 323 just in case and the settings were still there.)
Is it possible your provider changed something coincidentally at the same time? (e.g. port #, port filtering, forcing authentication for sending email, etc?)
HTH,
DH