Oh -- I figured it out.

I went to 'System->Preferences->Preferred Applications->System'

and saw that my 'Terminal emulator' was 'Custom' with no command.

I switched to 'gnome-terminal', and all was OK.

So I guess there was maybe some change in gconf usage, probably gnome-
wide (not related to gnome-panel) that caused my terminal emulator
setting to get lost or something on upgrade.  I have never explicitly
changed this -- I've always used the default emulator on this system,
which has always been gnome-terminal.

-- 
gnome-panel launcher reports error (gutsy)
https://bugs.launchpad.net/bugs/133130
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