first
Tested the pool auto diff behavior on small miners (Block Erupter, U1 / U2 the TTBit and a power reduced S5) and it works ok.
It is also working when the suggest-diff is added into the cgminer.conf file.
"suggest-diff" : "2" on Blockerupter
"suggest-diff" : "4" on U1/U2
"suggest-diff" : "10" on TTBit / 2Pack Gekko
Use of --suggest-diff X on the comand line during starting does the same
Even on S5 I added the suggest-diff line after ssh into the miner under /config cgminer.conf.
But that change is not permanent and get lost after a restart of the miner, so the new pool setting is more usefull for the S Series.
"suggest-diff" : "500" on a half S5
Edit: for reference add the real values