please attach the output of gconftool-2 --dump /desktop/gnome/peripherals/touchpad

do you have gsynaptics installed? It is known to interfere and overwrite the mouse capplet settings.

I do not have gsynaptics installed. This is a fresh install of Ubuntu Karmic (though an old /home directory)

Below is the dump of the gconf directory you asked for. It did contain other values without schemas that I deleted, though that did not change the behavior.

hunzikea@AlexT60:~$ gconftool-2 --dump /desktop/gnome/peripherals/touchpad
<gconfentryfile>
  <entrylist base="/desktop/gnome/peripherals/touchpad">
    <entry>
      <key>config_migration_needed</key>
      <value>
        <bool>false</bool>
      </value>
    </entry>
    <entry>
      <key>disable_while_typing</key>
      <schema_key>/schemas/desktop/gnome/peripherals/touchpad/disable_while_typing</schema_key>
      <value>
        <bool>false</bool>
      </value>
    </entry>
    <entry>
      <key>horiz_scroll_enabled</key>
      <schema_key>/schemas/desktop/gnome/peripherals/touchpad/horiz_scroll_enabled</schema_key>
      <value>
        <bool>true</bool>
      </value>
    </entry>
    <entry>
      <key>scroll_method</key>
      <schema_key>/schemas/desktop/gnome/peripherals/touchpad/scroll_method</schema_key>
      <value>
        <int>2</int>
      </value>
    </entry>
    <entry>
      <key>tap_to_click</key>
      <schema_key>/schemas/desktop/gnome/peripherals/touchpad/tap_to_click</schema_key>
      <value>
        <bool>true</bool>
      </value>
    </entry>
  </entrylist>
</gconfentryfile>

scroll_method 2 is two-finger scrolling, so this would be the reason why it's gone. can you please make sure that changing the scroll method changes this key?
Ubuntu used to have this key in [..]/peripherals/mouse/scroll_method and requires some migration to the upstream changes.
see also:
https://bugs.launchpad.net/ubuntu/+source/gnome-settings-daemon/+bug/404219/comments/3

I have the GUI modify the key "/desktop/gnome/peripherals/touchpad/scroll_method". I can observe that in real time in gconf-editor. The setting is also instantly applied as it should. The problem is that it doesn't survive logging in and out, so maybe gnome-settings-daemon or some other component overwrites it?

please try this with a newly created user. something is interfering but I have no idea what it could be. If it happens with a new user too then it'll definitely get interesting.

I take it you don't have GPointingDeviceSettings installed either and no magic scripts on login that call synclient.

I tested with a new user and indeed the setting is preserved across sessions.

I failed to find a reason though why for my user it is not. So far I have not found a config file that calls synclient.

Two things I observed:

* I'm used to GConf keys updating in the application when they are changed in the gconf-editor. The touchpad capplet doesn't do that. Reason?

* under /desktop/gnome/peripherals/mouse there are other keys that somehow seem to control the touchpad.

(In reply to comment #6)
> I tested with a new user and indeed the setting is preserved across sessions.
> 
> I failed to find a reason though why for my user it is not. So far I have not
> found a config file that calls synclient.
> 
> Two things I observed:
> 
> * I'm used to GConf keys updating in the application when they are changed in
> the gconf-editor. The touchpad capplet doesn't do that. Reason?

good question, the code looks the same. something must be missing, I guess. this is a valid bug, if you care to file one.

> * under /desktop/gnome/peripherals/mouse there are other keys that somehow seem
> to control the touchpad.

leftover from Jaunty and quite possibly the reason why it doesn't work. if you delete the keys, do they reappear after logout?

The GConf issue is now bug 592425.

I played with the GConf keys and suddenly the bug is "fixed" for me. I'm not sure why, but maybe the key "config_migration_needed" plays a role. It has no schema, so it disappears when unset. After logging in this morning, the key was back again. Is that a hint?

that's the Ubuntu gconf migration key and AIUI it should be a one-off key. so if that keeps coming back, please ask the Ubuntu guys how this is supposed to work, I don't actually know myself.

the migration is a one time thing, could you run "gconftool-2 --get /desktop/gnome/peripherals/touchpad/config_migration_needed"?