I just uninstalled and reinstalled Hangouts to get the updated version. (Even though the market showed the new version, it didn't have "Update" yet).
Now, I cannot log in to Hangouts... it keeps asking me to add a Google account. I've tried rebooting the phone, but no joy.
Gmail and other google apps still work fine, it's just Hangouts. I've tried adding my account, and it tells me that it already exists on the device (which is true).