The latest Chrome update (for me it was Google Chrome 14.0.794.0 dev) broke Proxy Switchy! extension. Below is the fix on Linux (Ubuntu):
0.) Select Auto Switch Mode on Switchy!

1.) Go to Chrome Preferences -> Under the Hood -> click Change Proxy Settings -> click Auto Proxy Configuration
It looks like "file:///home/skyred/.config/google-chrome/Default/Extensions/caehdcpeofiiigpdhbabniblemipncjj/1.6.3_0/plugins/SwitchyAuto.pac?1308504284104so"

2.) Delete the random string after the file extension "pac", so it will look like "file:///home/skyred/.config/google-chrome/Default/Extensions/caehdcpeofiiigpdhbabniblemipncjj/1.6.3_0/plugins/SwitchyAuto.pac"

3.) Edit the file "/home/skyred/.config/google-chrome/Default/Extensions/caehdcpeofiiigpdhbabniblemipncjj/1.6.3_0/plugins/SwitchyAuto.pac" from step 2 (You can do this by opening a terminal and enter
nano /home/skyred/.config/google-chrome/Default/Extensions/caehdcpeofiiigpdhbabniblemipncjj/1.6.3_0/plugins/SwitchyAuto.pac

4.) Delete any random text after function FindProxyForURL(url, host) {...} (this is important, delete any text after the closing bracket "}").

5.) Close and Reopen Chrome, the auto switchy should work now.