Thank you for backing me up by trying it. There will be many many people upset who relied on this app to wake them up and it will fail because they forget to open it and leave it running over night.
This bug is unique to the app, then. I use Alarm Clock Pro and, though it has some visual bugs (elements sometimes overlap each other), it never has an issue with making noise. It'll even sound off in the background.
As a developer, the multitasking APIs in iOS 7 leave me wondering what more you could possibly want, other than having two apps usable and on screen at the same time. iOS 6, and I think 5, too, had adequate APIs for simply making sounds without the app being visible.