Since the OTAs for KRT16S started rolling out in the middle of last week, some Nexus 4 owners updating from Jelly Bean are experiencing really troubling behavior after installing the new version. There are reports of issues with core interface functionality like a non-working Home button, Quick Settings toggle, a broken dialer, and various other issues. Not all affected devices have had exactly the same results, and many weren't hit, but some unusual complications have definitely started turning up.
The problems seem to be limited to those upgrading from the final version of Jelly Bean (JWR66Y) to the most recent build of KitKat (KRT16S) via the OTA, or using the factory image without wiping data. Devices updated from the KRT16O factory image posted a couple of weeks ago seem to be unaffected. A specific cause for the malfunction hasn't yet been identified, but various reports suggest there is no connection to whether a device is rooted or if the bootloader is unlocked.
So far the only fix for the malfunction seems to be wiping data through a factory reset. This has the side-effect of clearing out all of your installed apps and locally stored data, so be sure to make a backup first. For the more advanced users this probably won't be more than an inconvenience, but the average person is likely to be put out quite a bit.
Update: A possible fix has been suggested by Paul O'Brien. If you have adb set up on your computer, try running 'adb shell am start -n' from the command line. Alternatively, if you use a launcher capable of running custom activities (Nova and Apex are popular choices), try going to the widget drawer and creating an activity pointing to Setup Wizard > SetupWizardTestActivity, then run it. Once the Setup Wizard has started, go through the normal steps for setting up a phone. In theory, this should fix the various button issues. None of us at Android Police can reproduce the bug, but this method shouldn't cause any adverse effects. Good luck, and let's hope this works for everybody! - Thanks, Paul!
We can't be sure how widespread the issue is, especially since it doesn't appear to have hit the Nexus product forums or AOSP issue tracker, but we've certainly heard complaints from quite a few people. Hopefully there won't be too many affected, and perhaps a new OTA will come out with a more reliable upgrade script. In the meantime, if you haven't yet updated, keep this in mind when deciding if you want to continue with the installation. As usual, we'll keep you posted if we get any more information.

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