UPDATE: This turned out to be a bug in R14 of the SDK tools. It has been fixed in R15 which was released on Oct/27/2013. Updating to the latest release solves
In the LogCat tab on the upper far right there is a down pointing arrow with a line under it to enable
"Scroll Lock"
On older versions it's a pause button to
"Pause receiving new logcat messages"
That should do the trick!