This happens with both the released beta and beta_refresh build 73, but not 1.3.1 on Windows.
I've attached a test case showing the behavior. Run it on NT (haven't tried 98 or 2000...), launch it and move the dialog in the y direction until only the title bar is visible, the rest is off screen. Slowly drag the window in the y direction back on screen and you'll see that the window doesn't repaint, instead you get the background color from the Dialog. If you comment out the call to setSize and invoke pack, then everything works. I could only get this to happen with a Dialog, if instead I created a Frame it would paint properly.