Vector shape to smart object, is blurry when scaled

I've recently been upgraded to Photoshop CS5.5 and am having issues with smart objects.
Quite often I would:
make a shape layer, say a circle
apply a layer style, say a stroke and drop-shadow
Convert this to a smart-object
Resize this object to whatever I needed and it would scale perfectly, the layer styles and crisp edge would scale.
Now, when I use this same workflow, the whole object becomes blurry - like it's become one giant bitmap instead of retaining its original nature.
The blurred smart object loses it's vector nature and looks horrible, this is surely an error.

It depends on how you scale the smart object layer. If you just use Ctrl+T free transform Photoshop will matieilize the pixels for the layer then resize the materilazed pixel layer like normal raster layer not text not a shape layer. If on the otherhand you double click on the smart object icon in the layer in the layers palette Photoshop will open the smart object in photoshop. If it a RAW file it wil open in ACR. If is is a Photoshop Document like a PSD, Tif, Jpeg etc it will open in Photosgop. If it is some Photoshop object like a layer group a collection of layers an vector shape layer it will open in Phpotoshop.  You can then scale the smart object  with Photoshop tools like ACR or Image size set resample constrain scale layer style etc to scale the smart object when you use save the change Photoshop will update the smaer object layer in the document. You can do the save by clicking the Close icon and respond yes to save.  Scaling the smart object layr this way  will scale text and vectors the way you want them to be scaled.
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