It isn't terrible in 1.2.6 but it isn't right either. The funny thing about V1.2.5 is that sometimes there was a tiny gap and then sometimes it got the gapless perfect. So it seems like they were close to pegging it.
I am definitely enjoying the sound of the new firmware. They seem to have succeeded in widening the soundstage without sucking out the mids as was my complaint in 1.2.3beta. The bass may be a bit stronger than 1.2.5 but it is sounding plenty tight.
Same observation here, the bass has gotten a bit thumpier than 1.2.5 contrary to other's observation of lesser bass. 1.2.6 still maintains clear mids and highs. I hate the gapless now. The gapless setting in 1.2.5 I thought is already fine.
I guess I'm not as sensitive to soundstage as I can't discern any changes. The bass now sounds amazing with my T1/C5D combo.