Update: Several commenters who have installed the 4.2.1 release candidate build of iOS report that it fixes the sustained-ring issue for Line2 and other VoIP apps.
According to an email sent to registered users today, users who run Line2 in the background after upgrading to iOS 4.2 may have trouble with the ringer. Specifically, it will continue to ring even after an incoming call is answered.
Line2 adds a second line to your iPhone that works over 3G and Wi-Fi. It also allows for unlimited texting in the U.S. and Canada. International text messages cost US$0.10 each. Tokutumi notes that Apple Developer Support has been made aware of this issue with the 4.2 release candidates. However, as of the most recent iOS gold master build, it's still a problem.
Of course, Line2 will continue to work as normal under older versions of the iOS. If you're using this solution, just sit tight and wait for Toktumi to announce an official fix.
Thanks Jon & e hewitt!