After looking through console logs, and trying different things, it happens when I'm connected to the TimeCapsule. If I turn off the wireless on the TC and connect using another Airport Extreme, it reconnects fine.
It seems its to do with a 'reconnect key'
12/07/2009 14:09:25 kernel AFPSleepWakeHandler: waking up
12/07/2009 14:10:37 kernel AFP_VFS afpfs_DoReconnect: GetReconnectToken failed 32 /Volumes/home
while a successful re-connection looks like
12/07/2009 19:05:17 kernel AFP_VFS afpfs_DoReconnect: Restoring session /Volumes/Files
12/07/2009 19:05:17 kernel AFP_VFS afpfs_DoReconnect: get the reconnect token
Its bad news because to the AEBS over 'n' I only get 130.
More as I get it.
Update: spoke too soon... still getting this error even when connected the other AEBS.
Update 2: I didn't get to why this is. Eventually I installed from the supplied 10.5.7 DVDs onto an external firewire drive, and booted from that. I copied over my profile and wake works just fine. So I wiped the built-in drive, and Carbon Cloned the working one back over. I lost some things like printers and some other system settings, but these are easy to restore. And I'd rather have wake from sleep work properly.