Your comments

I'm running android 2.3.7 (CM7) on htc incredible S.

the same issue still occurred on the xiialive beta.

also I've done the following test: (all enable unlimited retry)

1.while playing music in background, enable a flash light app (to keep system on), the music always re-play after retrying connect .

2. while playing music in background, no flash light app, screen goes dark, the I hear the (re-connect sound ) several times, but no music comes back.  The music stream comes back immediately after unlock the screen.

3. setting->general -> screen timeout -> always on.  the music always re-play after retrying connect .  (but It took battery power to light up the backlight even I don't need it.)

My thought is to enable wake_lock while the app is running,  but disable it while the app retrying connect more than 20 times ( for example).  and keep the wake_lock while "unlimited retry" is enabled.