I'm using Illustrator CS5 on OSX. I run into this strange behavior and I can't figure out why it happens (and stop it from happening).
This is what I do:
- Draw a rectangle
- Effect > Warp > Arc
- Set to
-6
- OK
- Effect > Stylize > Round corners
- Set to
6px
- OK
Then, I take the corner (shift pressed) and resize the shape, making it smaller. Then at a certain point the shapes deforms.