Update Sep. 20, 2010: Cisco has created new bug ID CSCti89945 for this issue. See my original post on this issue here.
CSCti89945 Bug Details
wlc upgrade to 220.127.116.11, N breaks requires wlan deletion-readdition.
when a wlc is upgrade from say 18.104.22.168 or later to 22.214.171.124 the wlans do not work with the N rates. a/b/g regular rates work on N capable clients
Issue is seen specifc to N rates when upgrade from lower versions to 126.96.36.199
Delete the WLAN and recreate or add the WLANs back for N rates to start working on wlc.