The latest version of yasnippet is NOT compatible with auto-complete
Yes. The latest yasnippet (yasnippet-20120822.52) changed too many APIs and I cannot figure out how to work around it. Upgrading to the latest auto-complete (auto-complete-20120922.1815) won't solve the problem.
See https://github.com/capitaomorte/yasnippet/issues/311 for the details.
So here is the fix. You can use older version of yasnippet (yasnippet-20120718) and wait until the issue is fixed.
Here is the link of older version, http://dl.dropbox.com/u/858862/yasnippet-20120718.tar.gz.