This is not good. If you rely on your iPhone to remind you on things using the one time off function (Never), check it again. Most probably it cannot function correctly.
To fix it (temporary) before Apple fix it, you can set the alarm to recurring (Repeat) as shown below.
I have tested it and it will work if put to repeat. I know it is a bit troublesome but it actually can temporary “solve” the problem.
This has become a hot topic on Twitverse. I guess this must be a setback for Apple. I am sure Steve Jobs will be interested on why they did not detect this issue earlier.
Updated: 2nd January 2011 from Engadget.
Update 2: Apple responded to us on the issue, though they didn’t offer any surprises:We’re aware of an issue related to non repeating alarms set for January 1 or 2. Customers can set recurring alarms for those dates and all alarms will work properly beginning January 3.