I can confirm this bug too - I've just done a fresh install of Edgy from
CD (tried it twice) and I get it every time.  However, here's the twist
for me:

I ONLY get it when I connect to my box through VNC.  (I'm using TightVNC
- not sure if that matters)  If I simply login at the console, there's
no problems.  But through VNC, I get it every time.  Also, I don't get
the slowdown that others are reporting.  When I connect through VNC and
it starts the session, it starts up rapidly - but the most obvious
problem (aside from the error message) is that the UI is no longer the
nice Ubuntu "human" theme, it's the ugly default gnome theme.  It's also
apparent that certain UI settings are not working.  If I try to change
the theme, I get the "gnome settings daemon" error message again and it
doesn't allow me to change it.

Since I primarily use this machine as a headless workstation, not having
the correct UI theme and settings is really a bummer.   If there's any
other info I can provide please let me know.

-- 
gnome-settings-daemon crashes at login
https://launchpad.net/bugs/61381

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