I came across a problem recently when trying to debug my application after upgrading from Flash Player 9 (Debug version) to 10.2 (Debug version). As soon as I upgraded my application stopped logging. I searched everywhere and whilst I found a lot of people with the same problem never really found an answer.
After a lot of digging it appears to be the way you target the flash player version. My application was targetting Flash Player 9 (in my flex-config.xml):
Changing this to 10 started the trace logging again. As I wanted to maintain the v9 target I’ve ended up reverting back to Flash Player 9 to get the logging working again.