So here's the deal. Valve definitely broke Dys. However, they did leave us an option to make the game playable again, but you will be required to make the change manually yourself.
To fix your Dystopia, in your Steam Library, right click the game and go to Properties. From there, go to the "Beta" tab, and select "Previous" (NOT PREVIOUS_UPCOMING!). Once you do that, your Dystopia should "Upgrade" (which is really and SDK downgrade).
This should fix the issues for now. I will look into merging the new SDK code into the Dystopia 1 code and release Dystopia 1.42 (no promises).
Server Admins: I recommend NOT updating your servers.
It's Dystopias 10th Christmas. We may not be a large community, but it is your continued support that makes dystopia a fun game year after year. While you are taking advantage of Steam Sales, remember that Dystopia is always free and we always have games occuring, so once you've completed your new game and need something else to play, we're here to frag you in the name of Datatrust.
This Winter Sale we're offering large discounts, firstly Galacide our latest title a 'shmup meets puzzler' on the Unreal4 Engine is now on sale -80% off the price, Blade symphony is now on sale with a massive up to -90% off and as always Dystopia is free, so plenty to explore this holiday. If you haven't already had the chance to check out all of our games on steam, now there is no excuse!