Just for illustration of what I'm seeing:
Oh, I figured it out.
When I go to clist options and set the 2nd row item (status) to normal, it works as expected. When I check the "xstatus has priority", this behavior occurs.
Why is that? What changed? I haven't changed this option recently. Why do I have to disable it now?
EDIT2:
Okay maybe not. It started showing "away" for people who were online with this setting, so I switched it back (to use xstatus) and now it looks correct. Online/away/etc is showing properly.
I have no idea what's going on.