For those using Windows 7, the order has been changed to the "date modifed" of the photo file, and Apple's FAQ was rewritten a few days ago to reflect this.
Apparently, this does not affect the order of previously snched photos - only photos that are newly synched to a device after the iTunes update is installed, whether they are additional photos or modified versions of earlier ones, etc.
I have to say that this was an exceedlingly dumb decision by Apple. The date modfied often bears no relaton to the actual date the photo was taken. Any modifications made to a photo (say, in Picasa or Photoshop) which is then re-synched through iTunes will impact the date in which a photo is ordered, even if the modification is made a year later. Also, photos downloaded fom Facebook, etc. generally have file dates and "dates modified" unrelated to the actual date the photo was taken - much less an order preferred by a user.
The only workaounds of which I am aware are to manually change the "date modifed" atrubutes of the photos to reflect the sequence you want, delete the iPod photo cache and re-synch, or, as I have done, delete the current software, delete the cache, install the last version and re-synch the photos so that file names govern.the order they are presented.
Can't Apple give us an option? The iPad is marketed in part as a great way to show photos, yet its Windows softrware displays them in a an irational manner with the user having virtually no control over how they are ordered.