There appears to be some sync issue with gradle if you update to Android 1.2. You might come across this error when you start Android Studio after the latest update.
Warning:The project encoding (windows-1252) does not match the encoding specified in the Gradle build files (UTF-8).
This can lead to serious bugs.
<a href="http://tools.android.com/knownissues/encoding">More Info...</a><br><a href="open.encodings.settings">Open File Encoding Settings</a>
The solution is to go to File->Settings->Editor->File Encodings
Ensure both IDE Encoding and Project Encoding are UTF-8 (Recommended by Google: http://tools.android.com/knownissues/encoding)
Will be posting more updates as appropriate. Thanks for the additional feedback!