I do the same thing...
The problem is that you removed the <div>, did you modify jboss-seam-ui.jar?
The reason for this is that the reRender is unable to locate the underlying component (the <div>). I'm pretty sure of this. If you set the reRender to the entire form, see if it works that way.
Well i just moved do seam 2.1 and there is a more important error that I will have to try fixing. I will try digging more into this isue when there is more time. Thanks.