The ability to manually switch "repeat" on and off was added in the 2.0 betas.

What's happening is that you simply haven't turned Repeat on. You are correct in that this is new to the 2.0 software. Fortunately, you can turn on repeat, and it will remember its state across power-pulls. My player has Repeat turned on and it hasn't been turned off in a long long time. So I don't have the problem.

Just turn on repeat.