I just updated my wordpress version to 3.4.2 and I installed xili-language plugin v. 2.8.1
Everything works quite nice except one detail - I have 2 languages pl & english. I uploaded icon for polish flag to ../twentyten-xili/images/flags where I have other flags, but wordpress won't show it in navigation menu. Meantime it is showing flag for english. I named file pl_pl.png and it has the same width and height as other flags. What is more curious - I did it on localhost (but with twentyeleven-xili theme) and it worked smoothly.
edit: link to plugin http://wordpress.org/extend/plugins/xili-language/