Index: wp-admin/network/settings.php
===================================================================
--- wp-admin/network/settings.php	(revision 23403)
+++ wp-admin/network/settings.php	(working copy)
@@ -62,6 +62,8 @@
 		if ( ! isset($_POST[$option_name]) )
 			continue;
 		$value = stripslashes_deep( $_POST[$option_name] );
+		if( 'illegal_names' == $option_name )
+			$value = explode( ' ', $value );
 		update_site_option( $option_name, $value );
 	}