[G2 and Desire Z Q&A, Help & Troubleshooting] jingahagani:
Anyone able to fix this issue?

It happened after CM 7.2 stable upgrade.

here is what I have tried so far:

1. reset permissions on conf file (and made wifi owner)

2. tried wpa_supplicant starting from shell. Gave error that:

# wpa_supplicant -Dwext -ieth0 -c/data/misc/wifi/wpa_supplicant.conf -dd
Could not get interface 'eth0' flags
Could not configure driver to use managed mode
ioctl[SIOCGIFINDEX]: No such device

D/wpa_supplicant( 2012): Initializing interface 'eth0' conf '/data/misc/wifi/wpa_supplicant.conf' driver 'wext' ctrl_interface 'N/A' bridge 'N/A'
D/wpa_supplicant( 2012): Configuration file '/data/misc/wifi/wpa_supplicant.conf' -> '/data/misc/wifi/wpa_supplicant.conf'
D/wpa_supplicant( 2012): Reading configuration file '/data/misc/wifi/wpa_supplicant.conf'
D/wpa_supplicant( 2012): update_config=1
D/wpa_supplicant( 2012): ctrl_interface='eth0'
D/wpa_supplicant( 2012): eapol_version=1
D/wpa_supplicant( 2012): ap_scan=1
D/wpa_supplicant( 2012): fast_reauth=1
D/wpa_supplicant( 2012): Initializing interface (2) 'eth0'
E/wpa_supplicant( 2012): ioctl[SIOCGIFFLAGS]
E/wpa_supplicant( 2012): ioctl[SIOCSIWPMKSA]
E/wpa_supplicant( 2012): ioctl[SIOCSIWMODE]
E/wpa_supplicant( 2012): ioctl[SIOCGIRANGE]
E/wpa_supplicant( 2012): ioctl[SIOCGIWMODE]
E/wpa_supplicant( 2012): ioctl[SIOCSIWAP]
D/wpa_supplicant( 2012): WEXT: Operstate: linkmode=1, operstate=5
D/wpa_supplicant( 2012): Failed to add interface eth0
D/wpa_supplicant( 2012): wpa_driver_wext_set_key: alg=0 key_idx=0 set_tx=0 seq_len=0 key_len=0
E/wpa_supplicant( 2012): ioctl[SIOCSIWENCODEEXT]
D/wpa_supplicant( 2012): Driver did not support SIOCSIWENCODEEXT, trying SIOCSIWENCODE
E/wpa_supplicant( 2012): ioctl[SIOCSIWENCODE]
D/wpa_supplicant( 2012): wpa_driver_wext_set_key: alg=0 key_idx=1 set_tx=0 seq_len=0 key_len=0
E/wpa_supplicant( 2012): ioctl[SIOCSIWENCODEEXT]
D/wpa_supplicant( 2012): Driver did not support SIOCSIWENCODEEXT, trying SIOCSIWENCODE
E/wpa_supplicant( 2012): ioctl[SIOCSIWENCODE]
D/wpa_supplicant( 2012): wpa_driver_wext_set_key: alg=0 key_idx=2 set_tx=0 seq_len=0 key_len=0
E/wpa_supplicant( 2012): ioctl[SIOCSIWENCODEEXT]
D/wpa_supplicant( 2012): Driver did not support SIOCSIWENCODEEXT, trying SIOCSIWENCODE
E/wpa_supplicant( 2012): ioctl[SIOCSIWENCODE]
D/wpa_supplicant( 2012): wpa_driver_wext_set_key: alg=0 key_idx=3 set_tx=0 seq_len=0 key_len=0
E/wpa_supplicant( 2012): ioctl[SIOCSIWENCODEEXT]
D/wpa_supplicant( 2012): Driver did not support SIOCSIWENCODEEXT, trying SIOCSIWENCODE
E/wpa_supplicant( 2012): ioctl[SIOCSIWENCODE]
D/wpa_supplicant( 2012): State: DISCONNECTED -> DISCONNECTED
I/wpa_supplicant( 2012): CTRL-EVENT-STATE-CHANGE id=-1 state=0 BSSID=00:00:00:00:00:00
D/wpa_supplicant( 2012): wpa_driver_wext_set_operstate: operstate 0->0 (DORMANT)
D/wpa_supplicant( 2012): WEXT: Operstate: linkmode=-1, operstate=5
D/wpa_supplicant( 2012): wpa_driver_wext_set_wpa
D/wpa_supplicant( 2012): WEXT: SIOCSIWAUTH(param 7 value 0x0) failed: No such device)
E/wpa_supplicant( 2012): Failed to disable WPA in the driver.
D/wpa_supplicant( 2012): wpa_driver_wext_set_drop_unencrypted
D/wpa_supplicant( 2012): WEXT: SIOCSIWAUTH(param 5 value 0x0) failed: No such device)
D/wpa_supplicant( 2012): wpa_driver_wext_set_countermeasures
D/wpa_supplicant( 2012): WEXT: SIOCSIWAUTH(param 4 value 0x0) failed: No such device)
D/wpa_supplicant( 2012): No keys have been configured - skip key clearing
D/wpa_supplicant( 2012): Cancelling scan request
D/wpa_supplicant( 2012): Cancelling authentication timeout
E/wpa_supplicant( 2012): ioctl[SIOCGIWMODE]
E/wpa_supplicant( 2012): ioctl[SIOCSIWAP]
D/wpa_supplicant( 2012): WEXT: Operstate: linkmode=0, operstate=6
E/wpa_supplicant( 2012): ioctl[SIOCGIFFLAGS]