Have you enabled nano library -
http://www.cypress.com/?id=4&rID=87354 nano library
Also memory use changed, settings dropped, maybe increase them (note below is for PSOC 5LP) -
The heap and stack size were reduced in 3.1, try restoring to 3.0 levels 4K and 16K respectively.
3.1 default settings are now 128 bytes and 2K.
System tab in Fitterxxxxx*.cydwr file, workspace explorer near the top.
Actual version for Creator is now 3.2 (has just rolled out) some minor changes:
Under Project -> Build Settings -> Linker -> General you will find two entries concerning newlib-nano. Set both of them to TRUE.
As Dana pointed to: Set the heap-size in the system-view of the .cydwr file to (at least) 0x0100 bytes.