This seems like a very bizarre problem and believe me I've done a lot of searching before posing the question here. I am using the latest version of Rails 3 and Rspec 2 with Ruby 1.9.2, and I can't get autotest to run my specs properly when they fail.
When all of my specs pass, it works great; as soon as I make a change, the specs re-run and all is well.
When I have a spec failure, autotest halts instead of waiting for me to make another change. So it sort of defeats the whole purpose of autotest - my tests go red and I don't get to make them green again unless I manually run autotest again.