...well, I haven't tried 3.x, but I thought I'd better mention the version I see this with in the issue title.
1. Editing pre-saved nodes (created before installing WYSIWYG) that include line breaks removes all line breaks during edit.
2. After re-entering the line breaks and then saving the node, the line breaks are removed from the node in view mode. If you go into edit mode again the line breaks are still there though.
I tried playing with the "Remove linebreaks" setting as well as the "Preformatted" and "Apply source formatting". No combination seems to work for me. Am I doing something wrong?