7.4.1 and iPhone - not recognising watched video - keeps downloading

The latest bugfix version of iTunes is not acting on the 'watched/deleted' flag on video from my iPhone.
For example - I have iTunes set up to only sync unwatched episodes of my seasons pass to Mad Men to my iPhone. On my iPhone once I watch an episode I delete it - clearing space for the next week's program to be downloaded.
Previously once I watched a program on my iPhone it was marked watched on iTunes at the next sync and not downloaded. Now when I watch a program on my iPhone it remains marked as new and is therefore downloaded again to my iPhone.
I can't tell whether this behaviour changed in 7.4 or 7.4.1 - as I only noticed it after the upgrade this morning.
Message was edited by: wild sun

This is happening for me on Movies, TV Shows, and podcasts. It is extremely annoying, lets hope this can be addresses soon.

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