Works fine on Precise now, so somewhere along the road it was fixed.
Marking as invalid though because I'm not sure which package fixed it.
** Changed in: gnome-session (Ubuntu)
Status: Confirmed = Invalid
** Changed in: libgnomekbd (Ubuntu)
Status: Confirmed = Invalid
--
You
Status changed to 'Confirmed' because the bug affects multiple users.
** Changed in: gnome-session (Ubuntu)
Status: New = Confirmed
--
You received this bug notification because you are a member of Ubuntu
Desktop Bugs, which is subscribed to gnome-session in Ubuntu.
Status changed to 'Confirmed' because the bug affects multiple users.
** Changed in: libgnomekbd (Ubuntu)
Status: New = Confirmed
--
You received this bug notification because you are a member of Ubuntu
Desktop Bugs, which is subscribed to gnome-session in Ubuntu.
** Attachment added: libgnomekbd.png
https://bugs.launchpad.net/bugs/872429/+attachment/2536793/+files/libgnomekbd.png
** Also affects: gnome-session (Ubuntu)
Importance: Undecided
Status: New
--
You received this bug notification because you are a member of Ubuntu
Desktop Bugs,
Forgot to mention - using Oneiric fully updated as at 2011-10-11:
gnome-session-fallback 3.2.0-0ubuntu3
libgnomekbd-common 3.2.0-0ubuntu1
--
You received this bug notification because you are a member of Ubuntu
Desktop Bugs, which is subscribed to gnome-session in Ubuntu.