[eluser]pickupman[/eluser]
The log threshhold relates more to the application flow of CI. You may want to check your /index.php file. With the 2.0.+, a define is at the top for [url="http://ellislab.com/codeigniter/user-guide/general/environments.html"]setting the environment[/url]. By default, it is set to 'production', which turns off all php errors which is correct for a production [environment. Set this to 'development' and you will turn PHP errors back on. Also, with the new structure you can have a whole set of config for your development environment (database.php, config.php, etc). Just name a folder development inside of your application/config/ folder.
application
-config
-development
-config.php
-database.php
If you don't wish to have a set of separate config files for the development environment, CI will fallback to the ones in the application\config folder