Yep, did a quick test on my iPhone 4 and iPad 1 and the latest version 3.2 worked fine for me under IOS 5. So that's a very nice surprise that after all this time they still appear to be supporting Stanza. Many people here will be happy!
However I have noticed one omission, which I guess is hardly surprising. Under "Get Books", the option to download your books directly from your Fictionwise library is gone. I suppose you can always load via iTunes.