Running OS X 10.6.4 Does the same thing for me, DESPITE the fact that I've got 'Open New Windows in a new tab instead' option selected.

Start Firefox in Diagnose Firefox issues using Troubleshoot Mode to check if one of your add-ons is causing your problem (switch to the DEFAULT theme: Tools > Add-ons > Themes). See Troubleshoot extensions, themes and hardware acceleration issues to solve common Firefox problems and Troubleshoot issues with plugins like Flash or Java to fix common Firefox problems

If it does work in Safe-mode then disable all your extensions and then try to find which is causing it by enabling one at a time until the problem reappears. You can use "Disable all add-ons" on the Safe mode start window to disable all extensions. You have to close and restart Firefox after each change via "File > Exit" (Mac: "Firefox > Quit"; Linux: "File > Quit")

I actually found a resolution to the problem by accident at the end of the week when I do my weekly ritual on my PC (it's over 10 years old). I run a free software called Advanced System Care which cleans the registry, junk files. adware, etc. After that finished doing all that cleaning, I started up FireFox and it runs like normal. My conclusion is that the last upgrade must have conflicted with some of the junk files or cookies. Oh well .. maybe this will help others... but thanks for your suggestion.