There's a new ocean biome - maybe that's related to where the new terrain gen would have had open sea, but the existing stuff was already generated there, so when the new chunks got generated it basically caused the glitch cliff. So not a bukkit bug (unless they claim to deal with that).
Yeah, looking at that I'd say that's definitely what it is - you can see the way that area just looks so much better - more natural shapes, proper beaches rather than chunks of sand, winding rivers, and so on.
I think that in 1.8 the terrain generation was totally redone, meaning that the new areas that are now being generated are using a completely different system.
Is it just Skyrim that has taken people away from Minecraft? Didn't it become desolate before that? Not been on a while myself so wouldn't know though. Last thing I did was tidy up some of the bottom of my hole but not sure I'll end up using that now. I'm sure that'll make Ant happy ;) Maybe after Skyrim I'll finish it off.
Also, who (if anyone) is playing on Teh Mine recently?
Is there any chance of getting all mobs on, maybe with a plugin that only lets them spawn in the "wilderness" (i.e. natural caves and non built areas), if there's such a thing.