I’ve been using Cufon for a good few months on non-WP sites, figured I’d use a plug-in for it when it came to Cufon on WP.
I can confirm that the bug is in 1.6.5, but not in 1.6.4. The bug appears due to an error in the new functionality, it’s the bit in the update description “…and now you can set the positions where the plugin loads in your template”.
I’ve narrowed it down to the new functionality that allows you to choose where the delay thing outputs…you can choose header or footer and you can therefore bounce your error between the two (so it is definitely this part).
For now I’d suggest dropping back to 1.6.4, as the error doesn’t occur here.