I think I've discovered where the issue is - Bluetooth. Turn this off and use a USB KB and USB Mouse. Leaving BT on, even with USB KB & mouse doesn't work.
I've tried this with an Apple USB KB and a really cheap USB mouse and all seems fine. Obviously, you are going to loose the magic mouse 'goodness', but for you guys using TB as Time Machine backups it may be the only option until Apple fixes this. For me, I will be using the magic mouse and only switching on TB when i need it. Hopefully, the comments I've supplied in the dump info will point their OS X people in the right direction.
I've also been speaking to an Apple tech guy as there was a possibility that either an Apple, or 3rd party app was causing this. This is not the case as I reinstalled Yosemite on a fresh partition with no other apps. Booting from this with BT KB and mouse caused a WFS failure within 10 minutes 😁
I will be emailing the tech guy soon with my "findings". Hopefully this, plus comments on the dump info, will get this issue fixed quickly.