We have our Office for Web Apps server working and on some subsites, when you hit 'Create Document' it opens the menu to choose the Word/Excel/PowerPoint/One Note type and all works fine. On other sites, in the same site collection, have the 'Upload Document' dialog pop up when Create Document is clicked. On those same sites, we can open existing word documents in the OWA browser, so it seems the OWA server is correctly joined. It just seems like these two subsites aren't aware that you can use OWA. I've checked the library settings and have 'Open in Browser' for documents set. Is there anything else I can force onto these libraries to use OWA?
Turns out, if you have Allow management of content types set to Yes, you don't get the pop up. Turn it off, and voila, back to normal. Don't remember seeing that documented anywhere.