Update
Yep. I contacted Dropbox and they told me the following...
Hi David,
Thanks for writing in. It sounds like the third party app you're using hasn't yet been updated to use the new version of the Dropbox API, which was introduced in Oct 2011. The old version of the API was recently disabled. If you need to use this app, the developer of the app will need to update it to use the new version of the API. You should check to see if an update for the app is already available. Otherwise, you may wish to contact the developer of the app to let them know that you aren't able to use the Dropbox integration.
Sorry I can't be more of a help!
I reached out to Dustin - I've been in touch with him in the past. I've even reviewed Wallet - positively. I'm glad to hear that an update might be forthcoming. I'm in the process of asking Apple to yank it from the app store because of the broken syncing and lack of support. Now your telling me an update is coming? Dustin needs to update the app store. People will be pissed off if they spend $20 on it and it doesn't sync. In my case owning and using one my of own domains I was able to set up WebDav syncing, but not every one can do that.
If Dustin isn't going to support the app 100% he should consider releasing the source into the public domain under Creative Commons or something. I have so much stuff stuffed into that app right now that due to its circumstances I'm looking for a replacement.
The replacement looks like it will be the sham wow of apps - 1Password. Which I think is overly complicated yet a lot more refined than some aspects of Wallet. Basically I just wanted something to hold all my serial, numbers, etc. in. It's important that it work since it is key element of my "estate" should something happen to me, etc.
So I'm up and running on WebDav for now and btw the iOS app doesn't even give an error message when the sync fails. It acts like nothing is wrong. Additionally you might pass on to him that wifi sync is acting like it is broken, etc.