Setting a rectangle is definitely faster since the hit testing is cheaper, and yeah it's always good to set touchEnabled = NO when something doesn't need to listen to touch events. Also, if you know that all the objects within a container will never need to receive touch events you can set container.touchChildren = NO (yea, the name is very unfortunate :)).

Oz

I am having no problems with the hit area being a rectangle, try this stand-alone code and see if it works for you:

- (void) initializeAsRoot
{
    [PXDebug setDrawHitAreas:YES];
    [PXDebug setDrawBoundingBoxes:YES];

    PXSprite *sprite = [[PXSprite alloc] init];
    [self addChild:sprite];

    sprite.x = self.stage.stageWidth  * 0.5f;
    sprite.y = self.stage.stageHeight * 0.5f;

    [sprite.graphics beginFill:0x008080 alpha:1.0f];
    [sprite.graphics drawCircleWithX:0.0f y:0.0f radius:64.0f];

    PXRectangle *_hitArea = [[PXRectangle alloc] initWithX:-100.0f y:-100.0f width:200.0f height:200.0f];
    sprite.hitArea = _hitArea;
    [_hitArea release];

    [sprite addEventListenerOfType:PXTouchEvent_TouchUp listener:PXListener(onTouch:)];
}

- (void) dealloc
{
    [super dealloc];
}

- (void) onTouch:(PXTouchEvent *)event
{
    NSLog (@"%@ [%@] on touch\n", event.type, event.stagePosition);
}

I turn the debug draws on so you can see the hit area. This may also help you find the bug you are having; otherwise, if you can reproduce the problem see if you can make a quick sample for me and I will hunt down a solution!

After looking further into this, I found the problem you were having. If you pull from the develop branch then I have just pushed a fix for it. I hope this helps!