What's going on is that the menu item Application->accessories->terminal
has a desktop file that tells that menu entry what to do when it is
pressed.  It is told to launch a gnome-terminal.

I believe if the desktop file for that menu entry gave a command for the
terminal in your preferred applications your problem would be solved.
Therefore I am switching this bug to gnome-terminal since I believe they
handle the desktop file for this menu entry.

** Package changed: xterm (Ubuntu) => gnome-terminal (Ubuntu)

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default terminal does not have an effect
https://bugs.launchpad.net/bugs/390372
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