I got my new Osmo Action, and everything is pretty good. Question that I have is while recording, if I rotate the camera upside down the image is upside down, regardless of the setting, where I have rotation set to auto.

Any thoughts?

" regardless of the setting, where I have rotation set to auto."

It locks the rotation of screen and recorded image when you start recording. If you view screen before you start recording then you will see orientation change accordingly when you rotate camera depending on whether you have set it to auto, up, or down.