Hi Pam,
I tested this out and confirmed the behavior you are reporting. I have logged the following bug to address this issue.
NIM050663: Layer packages created with 9.4 do not open in 9.3.1
It is our intention that cross version functionality with layer packages does work in the final release of 9.4. We will also be providing an option to create earlier verisons of the Geodatabase with ArcGIS Desktop, but it is currently not a function of 9.4 Beta One release.
I hope this helps address some of your questions and concerns.
Thank You,
Andrew