I too have been having problems with bluetooth on oz3.5.4.1 on spitz
When I first boot up, I can do "hciconfig -a" and it works, however, later on it reports an error at the end:Can't read local name on hci0: Connection timed out (110)"
I have to reboot before I can get anything working again; the odd thing is that if I have done "rfcomm bind...", I can do "cat /dev/rfcomm0" and it simply doesn't do anything - doesn't lock up, I can do CTRL-C
I think it happens when I put the Z into suspend; no amount of ejecting the card, restarting bluetooth, or even trying to "rmmod" the various kernel modules will fix it (I can never rmmod hci_uart).