Installed 5.8.0 from CD (clean install) and selected shadow and MD5 password through the installation. After reboot went and checked /etc/shadow and the hash for root's password was not MD5 until I reset the password manually. As a note I am unable to verify that this is still an issue in 5.8.1 but will attempt to reverify in a later beta.
msw will have to take a look at this.