Have you guys considered trying out the new super-dev-mode?
I only save the sluggish dev mode for when I absolutely have to have a java debugger to find out what's going on.
Super-dev-mode will cost you a few seconds per page refresh (though, OOM popping your JVM is much, much slower),
but it also gets rid of a very nasty class of bugs: "Ones you shouldn't bother with in the first place".
Performance in dev mode and compiled mode are very different,
even down to how asynchronicity and some timing works.
What makes production mode fast makes dev mode slow (jsni).
And, if you have the choice, always optimize for production.
Oh, and in regards to your upgrade woes, make sure you manually delete and gwt unit caches you have left,
a cached unit from one version will likely be incongruent with the new one.