The thing is, there's also an option to do that, so obviously the first thing I did was go and make sure it was set correctly. Then I restarted Photoshop. Then I tried using it a bit because I really needed to get a certain piece of work done.
It was only by fluke that I happened to tap capslock with my pinkie by accident and noticed the pointer fix itself. What is this feature for? I can't imagine a situation where it would be better to have a generic cursor than a circle that will show you how big the brush is going to come out. Unless you're using really huge brushes and can't see the edges, maybe.
Almost as annoying is the fact that you can't scroll off the edges of a picture, for example to grab the handles of a shape which extends off the canvas:
I love Photoshop to bits and feel much better for having ranted a little.