This should work (see the UI example for instance).
You're probably going to have to use your debugger here as I have no idea why this would happen.
Is the key id of your entity bean an object e.g. of type Long? If so, maybe it helps when you overwrite the equals and hashCode method in the entity class. This was the only thing that helped me (under 2.0.0.CR3) when I used s:convertEntity to assign the selected item to the object in the list.
Hehe, silly me.....sometimes it takes an assurance from the expert just to make one try harder. My mistake was to do a redirect (although back to the same page) upon error. Instead, i should just return a null and let seam takes care of restoring the values.