Um, "namespaces" means something else and it took me a minute to figure out what you were referring to. Just say "spaces in names" from here on out so we're on the same page.
It does look like there is a bug though in my case, it fails to create the folder. I'm not sure how or why you would get a truncated name. Do you see any errors in the logs?
[edit]
Actually, the error I was getting was because I was creating a subfolder with the exact same name as the file. If the folder name is slightly different, it seems to work properly even if there are spaces in the name. I suggest emailing support with your logfile attached so I can trace through what is happening in your case.