I also confirms that creating this soft link gets this error sorted. I
got this error immediately after upgrading to the Natty today.

sudo ln -s /usr/share/vte/termcap-0.0/xterm /usr/share/vte/termcap/xterm

Thanks for updating with this with the useful info.

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https://bugs.launchpad.net/bugs/140011

Title:
  Failed to load terminal capabilities from '/etc/termcap'

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