Yep, I noticed this too. All of my birthdays are now gone from my phone and don't appear on MobileMe webcal either.
This was one feature I really liked having on my iPhone and wish they would fix. I think it would be easy to make the birthday calendar appear above and not in the subscription area. If I turn off Push for calendars only, then I believe I can choose which calendars to sync in iTunes and the Birthday calendar will have a checkbox. But of course then I lose the push functionality of MobileMe which defeats the purpose.
Hopefully this will get resolved.
EDIT: As a fix I created another calendar in the top section called B-Day. Can't use Birthdays as it won't allow 2 cals of the same name. I then copied each birthday from the birthday subscription calendar, selected the B-Day calendar and pasted the event in the same day. Then selecting the one that went with the new calendar, I right clicked, selected edit, and told it to repeat every year, ending never. I did this for all the birthdays and in the year, which took about 5-10 minutes as I did not have a lot. Then I unchecked the box next to the birthday subscription calendar so that I don't see the duplicates and all my birthdays now show up on my phone and the me.com calendar in push style. The only downside is that whenever I add a new contact with birthday, I will need to remember to add them to my 'B-Day' Calendar as well. The upside, yes I found one, is that my son, nephews, anniversaries, friends' kids, etc. which don't show up on the subscription calendar b/c there is no contact info for them and they don't need one, can now be added to my B-Day Calendar so that I have them all on there.
