I haven't found anyone on these forums mentioning this problem, but found quite a few when I googled it. After I updated to iOS5, my audiobooks played at 1/2 speed and I could not find the speed switch. Evidently apple removed the speed settings with iOS5. From what I read after googling, podcasts played at 1/2 speed, also.
The one way I found to get to normal speed was to reset all settings and restore from a backup. Has anyone found a better solution?