OK it's working. Main fix I think is I used the new 2.1.1 library and all comms to the RFM69 radio seems to be fixed.

Current code:

• DESCRIPTION
• Simple binary switch example
• Connect button or door/window reed switch between
• digitial I/O pin 3 (BUTTON_PIN below) and GND.
• http://www.mysensors.org/build/binary
  */

// Enable debug prints to serial monitor
#define MY_DEBUG

// Enable and select radio type attached
// #define MY_RADIO_NRF24
#define MY_RADIO_RFM69
#define MY_RFM69_FREQUENCY RF69_433MHZ
#define MY_IS_RFM69HW

#if F_CPU == 8000000L
#define MY_BAUD_RATE 38400
#endif

#include <SPI.h>
#include <MySensors.h>

#define CHILD_ID 3
#define BUTTON_PIN 3 // Arduino Digital I/O pin for button/reed switch

int oldValue=-1;

// Change to V_LIGHT if you use S_LIGHT in presentation below
MyMessage msg(CHILD_ID,V_TRIPPED);

void setup()
{
// Setup the button
pinMode(BUTTON_PIN,INPUT);
// Activate internal pull-up
digitalWrite(BUTTON_PIN,HIGH);
}

void presentation() {
// Register binary input sensor to gw (they will be created as child devices)
sendSketchInfo("Binary Sensor", "1.0");
// You can use S_DOOR, S_MOTION or S_LIGHT here depending on your usage.
// If S_LIGHT is used, remember to update variable type you send in. See "msg" above.
present(CHILD_ID, S_DOOR);
// Send the sketch version information to the gateway and Controller
}

// Check if digital input has changed and send in new value
void loop()
{
int value = digitalRead(BUTTON_PIN);
#ifdef MY_DEBUG
Serial.println("Sensor Value");
Serial.println(value);
#endif
send(msg.set(value==HIGH ? 1 : 0));
sleep(BUTTON_PIN-2, CHANGE, 0);
}

Thanks,
Martin