I find both firmware versions to have dns issues:
Both versions forget custom dns settings in the DHCP section of the GUI.
However v1.06t is still issuing the correct dns IP's to my devices even though my custom settings have long since disappeared from the GUI.
Most routers I've used just have a dns relay, the HG635 however has a dns catching resolver.
The cache is a nice feature, but the resolver is pathetically slow taking over twice the time to forward a lookup to my ISP than it would for a direct lookup.
The following DNS benchmark graph shows the HG635 DNS resolver on ip 192.168.1.1.
The two ISP DNS resolvers the router forwards to are 212.159.6.10 and 212.159.6.9
Graph key:
Red == cached time
Green == uncached time
Blue == uncached "dot com" time