Recently i've updated my server on 1.3.1 from 1.2.5 build.... and, I use the same world from 1.2.5. And the problem it's is when players goes far from spawn they client crashes. This bug it's because the map is generated on 1.2.5? Sorry for my bad english.
Have you tried a new world? If it works with a new world then something is wrong with the old one. Any plugins that u used on 1.2.5 but doesn't use now that might have added something to the world?