It's not exactly news, but now we know for sure: conduction aphasia is NOT caused by damage to the arcuate fasciculus. Nina Dronkers presented data from over 100 patients at the SfN meeting showing convincingly that arcuate fascisulus damage does not cause conduction aphasia. In fact, it causes a much more serious language production deficit.
The idea of conduction aphasia resulting from damage to the arcuate fasciculus (AF) has been seriously challenged since 1980 when the Damasio's published their study of the anatomical correlates of conduction aphasia. That paper showed that conduction aphasia was often associated with left auditory cortex lesions (dorsal STG), not AF lesions. Subsequent case studies showed that damage to the AF does not cause conduction aphasia, and that conduction aphasia-like symptoms can be elicited by cortical stimulation (arguing against the disconnection theory of conduction apahsia). We reviewed some of this evidence in Hickok et al. 2000.
Nina's new study, though, is the first large scale investigation of the question, and really puts a nail in the AF-conduction aphasia coffin.