I have just recently updated to GeoServer 2.1-RC5, with built in Geowebcache 1.3-RC1 from GeoServer 2.1.2 with built in Geowebcache 1.2.6.
I had a projection defined in my geowebcache.xml file (EPSG:3005) to allow for caching a projection other than 900913 & 4326. It was working and I had cached 8 zoom levels.
When I upgraded, my custom projection no longer showed up as a caching option in the geowebcache demos page for the layergroup that geowebcache.xml has defined.
I have attached the file geowebcache.xml .. in trying to fix the error I altered the geowebcache version in the xml to say 1.3.0 (that was all I altered).
The layergroup that I am trying to cache is openstreetmap data that has been subdivided into many tables (for ease of styling) in PostGIS (version 8.4) and imported into Geoserver.
FYI, I do not have Native JAI & Native JAI ImageIO installed.