@drau9r - I have an iPad as well running iOS 4.2 gold master. I've run every 4.2 beta and now the final and I was not able to reproduce this. I tried toggling sound off and on and music off and on as well.

I'm sure you've tried this but have you hard rebooted your iPad lately?

If you did and this doesn't fix it, it might be worth doing a restore of the firmware.

Also, are you running 4.2 gold master or one of the betas yet?