Setting debug to true in web.config breaks Reporting Services in SharePoint

When using Reporting Services reports in SharePoint and at the same time changing the debug attribute to true in web.config the following error message might appear in a web browser alongside the Reporting Services reports not behaving properly:

Webpage error details

User Agent: Mozilla/4.0 (compatible; MSIE 8.0; Windows NT 6.1; WOW64; Trident/4.0; SLCC2; .NET CLR 2.0.50727; .NET4.0C; .NET4.0E; .NET CLR 3.5.30729; .NET CLR 3.0.30729; InfoPath.3)
Timestamp: Thu, 14 Oct 2010 10:01:21 UTC

Message: Sys.ArgumentNullException: Value cannot be null.
Parameter name: panelsCreated[x]
Line: 129
Char: 12
Code: 0
URI: http://servername/ScriptResource.axd?d=somethingcomplicated…

Changing the following attribute in the correct web.config will remedy the problem, however the debugging opportunities will take a hit…

<compilation optimizeCompilations="true" batch="false" debug="false">

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