Well, the latest app update has fixed the problems for me. I can now write on no-zoom and the letters don't disappear. In fact, it's better than it was because I can now start writing right up against the 'spine' of the notebook whereas before it would only work if I started away from the edge and moved towards it. I'm pleased to have it working again!
Penultimate 5.0 doesn't work on my ipad mini. I can write only if the zoom is enabled, and it's a feature I don't really need. And it's mad only being able to have no-zoom or max-zoom and nothing inbetween. This 'upgrade' has made it worse to the extent that I can't use it at all...so I'm off to find another app until it's put right.