Been stuck with it for a couple of days too, in the end i found the
solution:

gconf-editor and under desktop->gnome->background->draw background
enable it

found it here:
http://ubuntuforums.org/showthread.php?t=814329&page=2

Totally don't know how it changed from skip to zip, but I'm considering
not properly installed Nvidia drivers.

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https://bugs.launchpad.net/bugs/689861

Title:
  Solid color as desktop background even if wallpaper image is set

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