I've discovered more about the issue. Audiobooks from Audible play fine. Audiobooks made with Audiobook Builder do not. I found that Audiobook Builder created audiobooks include 3 tracks. Sound, Video, and Chapter. The Video track seems to be what causes the problem. To get my current audiobook to play nice with iBooks I downloaded Subler from http://subler.org/ to delete the Video track. I'm hoping Apple fixes this so I don't need to edit all of my books.
1. Make a copy of the audiobook just in case.
2. Open the audiobook in subler.
3. You should see 3 tracks listed. Sound Track, Video Track, Chapter Track. Select the Video Track so it is highlighted (not just checking it's checkbox).
4. Press the "Delete the selected track" button. It's the third button on the menu bar and looks like a "no smoking" sign.
5. At this point you should see just Sound Track and Chapter Track listed. Save the file.
5a. Depending on which version of the audiobook you edited, you might need to add it to your iTunes library again
6. Remove the audiobook from your i-device.
7. Add the audiobook to your i-device.
If you have Quicktime Pro and the older Quicktime Player 7 you can use it to delete the Video track as well.
