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I changed my directory from "workspace" to "Workspace" and Eclipse didn't complain on that but the program freezed totally and I could do anything. Perhaps it could be a nice functionality that warned the user that the workspace directory had changed instead of a freeze.
Did you change when Eclipse was running or between sessions?
I frooze even if I rebooted the computer or closed everything
changing target milestone to 3.2.1 (3.1.1 is bogus)
I was unable to reproduce this using 3.2. If you have detailed steps, please reopen.