Don't worry about the scales! I, too, am an Atkins convert, and I feel much better than I ever did while doing Atkins. The thing is, like Atkins, to make this thing work properly, you HAVE to exercise. When you're exercising and eating healthy, you will get fit and you will gain muscle. So, you might gain weight, but you'll lose inches. I currently weigh 130#, up from 125# when I changed over from LC. I love it! I'm still a size 4, but I don't have jiggly arms or thighs anymore. My jeans are actually a bit looser than they were.
Don't worry about what the scale says. Worry about building your strength, getting fitter. Diet is a huge part of that, but when you're as close as you are to what you considered your perfect size, don't be surprised if you find yourself with a smokin' hot body and weighing more than you do now.
This picture is a perfect example of the difference building your muscles can make: