this report has been filed here:

https://bugs.edge.launchpad.net/ubuntu/+source/vte/+bug/342402

"1. Create a new gnome-terminal.
2. Run 'echo -n ab'.
3. Note that the characters 'ab' appear before the next prompt.
4. At that prompt, type characters repeatedly until the line wraps.
5. Now try to delete the entire line of input with backspace.

Expected result:
You should be able to delete the entire logical line, despite line wrapping, using backspace.

Actual result:
You can only delete the wrapped line the cursor is on. Once you reach the left edge of the screen, backspace has no effect.

Note that this also happens in xterm so I don't think it is gnome-terminal specific. Also note that it doesn't happen if you echo only a single character, as in 'echo -n a' and it does happen for more than two characters."

Thanks,