I just installed Ubuntu Lucid x86_64 and the issue still persists for me.
Window Manager,  This is Ubuntu, so Gnome.  
System -> Preferences -> Appearances -> Vistial Effects the selected entry is: 
Normal

I get a just slightly difference experience now with Lucid though.
This time I tried with Calculator.  When I widen it to more than the full-width 
of the display (full-width is about 157 characters on my display, so I guess 
the point the title bar anomoly occurs is at about 250), then the terminal 
window contracts and is re-rendered on one workspace at the full-width.  What 
also happens is that my compiz settings get change, as described in #12 and #13 
of Bug #145704.  

Further atttempts to widen the terminal again past the full-width of the
display behaves identical to my initial report above (and as displayed
in the attachment.)  The difference with Lucid is that because the
close, minimize, maximize are now on the left stretching wide makes this
bug purely a cosmetic issue and not a usability issue.

After the first time this happens, that resizing behavior is
inconsistent.  However, I can get this to happen in an identical manner
again after logging out of the desktop and then logging back in again.

** Attachment added: "gnome-wide-stretch-anomoly.jpg"
   http://launchpadlibrarian.net/50033945/gnome-wide-stretch-anomoly.jpg

-- 
title and border not painted after widening window
https://bugs.launchpad.net/bugs/588128
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