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Hi Buddy,
I have the same problem. The site used to send activation emails, then stopped. I had to manually go in and activate each user (23 of them)! However, I can send emails to my users and they get them with no problem.
I haven't been able to get it to work since. I've tried different mail settings (PHP, SMTP, SMTPAuth) and nothing works. Searching this site provides no help, there seems to be mail problems all over, but never any real resolution.
Unfortunately, I have to set the registration to automatic, which I detest! But it's what I have to do to keep my users.
Incidentally, I'm using 2.2.4.
Good luck!
Dana