I had this issue with guake on my system. Following the fix given here
[1], I was able to solve this on my system. For your information I have
this in my vte folder:
termcap  termcap-0.0  termcap-2.90
And all but termcap have xterm in them.

This is the command I used as root.
ln -T /usr/share/vte/termcap-0.0/xterm /usr/share/vte/termcap/xterm

Chris

[1] https://bugs.launchpad.net/ubuntu/+source/vte/+bug/140011/comments/7

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