Ok --

I've tested this in a bunch of lowbie quests now:

Situation: I am solo and sneak up to a monster
Result: I do NOT get sneak attack damage on my opening attack when using handwraps. I do a little wussy one-armed punch and no sneak dice.
Control: To make sure I was sneaking properly (my sneak is maxed and I'm in harbor quests), I tested attacking w/ a qstaff and then I did get my sneak attack damage.

Not Tested: Sneak attack in a group (does sneak attack work at all w/ handwraps?)

Anyone else seeing this issue?

The character I'm testing on is 3 monk / 1 rogue w/ the halfling sneak attack bonus damage.

Cheers --

Cuth