CoreLocation still works in 7.1 on the iPhone 4S. See my detailed test results here, which were done on a 4S. So this is most likely an issue with your test setup, either the phone, the beacon or a combination of both.
First, do a reboot to see if the problem still persists as @gokhan-karaca suggests. Then try another iBeacon (what kind are you using now?), ideally an iOS-based one if you have a second device to test with. It may be that a software filter on the RSSI is rejecting the value measured by the bluetooth chip for some reason.