I've got the same chapter title problem when I stream mp4/m4v files to the PS3 (PS3 Media Server version 1.40.0). When you 'Definitely disable subtitles' in the 'Common transcode settings' it crashes the stream although it does remove the chapter info.
I have noticed that if you stop and restart the playback on the Playstation it removes the chapter info. Flipping annoying.
And as a footnote, I'm using Handbrake version 0.9.5 (2011010300) to rip the file and my operating system is Windows 7 Professional (32bit). It's driving me mad.