All of the 1.7 update do not have this issues, but all snapshots after 14w07 (currently up to 14w26b) are affected by this.
What's happening in the set of 3 screenshots:
-The top piston is retracted first, but can't pull the slime block, as the slime block is attached to the vertical piston which in turn is blocked by the lower piston (still extended)
-Then, the lower piston retracts, without the slime block
To create a functioning mechanism, remove the lower horizontal piston. The slime block will bring the vertical piston when it is retracted.
Thanks for pointing that out to me.
It seems to have been fixed for 1.7.9, but still remains a problem in the newer snapshots including the latest one: 14w18a
I added two more screenshots showing off the problem in the newest snapshot, 14w28a. This time during the day (I didn't realise I took the other ones at night when I did them)
As you can see, the tnt is able to pass into a block immediately above the dispenser, which is not normally possible in versions of 1.7 and earlier.