It looks like GoDaddy might have tweaked their .htaccess / mod_rewrite support. As I wrote in an earlier post, the way GoDaddy was supporting .htaccess was causing some confusion, in that even if you uploaded a correct .htaccess file, it could take some time to register. This might have changed.
Even though GoDaddy supports mod_rewrite, there are some definite peculiarities about their setup, with regards to .htaccess and PHP execution. Hopefully the observations I've made in this article will be of help if you're coming across the same problems I was.