I've just had this today as well. I'm using xubuntu and had to
kill/restart the nm-applet (https://bugs.launchpad.net/ubuntu/+source
/network-manager-applet/+bug/1006141 - seems related to suspend/resume).

In my case, going into vpn->edit showed that the group password was marked as 
"saved" but was blank for one vpn.  Another vpnc vpn entry was marked as saved 
but had the correct group password.  Both prompt for group password on connect 
and fail without entering itii  network-manager                           
0.9.6.0-0ubuntu7                            amd64        network management 
framework (daemon and userspace tools)
ii  network-manager-gnome                     0.9.6.2-0ubuntu5                  
          amd64        network management framework (GNOME frontend)
ii  network-manager-openvpn                   0.9.6.0-0ubuntu2                  
          amd64        network management framework (OpenVPN plugin core)
ii  network-manager-openvpn-gnome             0.9.6.0-0ubuntu2                  
          amd64        network management framework (OpenVPN plugin GNOME GUI)
ii  network-manager-pptp                      0.9.6.0-0ubuntu1                  
          amd64        network management framework (PPTP plugin core)
ii  network-manager-pptp-gnome                0.9.6.0-0ubuntu1                  
          amd64        network management framework (PPTP plugin GNOME GUI)
ii  network-manager-vpnc                      0.9.6.0-0ubuntu1                  
          amd64        network management framework (VPNC plugin core)
ii  network-manager-vpnc-gnome                0.9.6.0-0ubuntu1                  
          amd64        network management framework (VPNC plugin GNOME GUI)
ii  openvpn                                   2.2.1-8ubuntu1                    
          amd64        virtual private network daemon
ii  vpnc                                      0.5.3r512-2ubuntu1                
          amd64        Cisco-compatible VPN client
ii  libnm-glib-vpn1                           0.9.6.0-0ubuntu7                  
          amd64        network management framework (GLib VPN shared library)

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You received this bug notification because you are a member of Desktop
Packages, which is subscribed to network-manager in Ubuntu.
https://bugs.launchpad.net/bugs/1043043

Title:
  Prompts for both the user and group passwords even though group
  password has been saved

Status in “network-manager” package in Ubuntu:
  Incomplete

Bug description:
  Using up to date 12.10. Despite the group password having been saved, I am 
being prompted to enter both my user password and the group password upon 
initiating a VPN connection. This is a new issue with 12.10. Thinking this 
might be related to the the 12.04 to 12.10 upgrade, I have tried creating a new 
VPN account, but got the same result. VPN type is "Cisco Compatible VPN(vpnc)".
  --- 
  ApportVersion: 2.5.1-0ubuntu3
  Architecture: amd64
  CRDA: Error: command ['iw', 'reg', 'get'] failed with exit code 1: nl80211 
not found.
  DistroRelease: Ubuntu 12.10
  EcryptfsInUse: Yes
  IfupdownConfig:
   auto lo
   iface lo inet loopback
  InstallationMedia: Ubuntu 11.10 "Oneiric Ocelot" - Release amd64 (20111012)
  IpRoute:
   default via 192.168.1.1 dev eth0  proto static 
   169.254.0.0/16 dev eth0  scope link  metric 1000 
   192.168.1.0/24 dev eth0  proto kernel  scope link  src 192.168.1.150  metric 
1
  NetworkManager.state:
   [main]
   NetworkingEnabled=true
   WirelessEnabled=false
   WWANEnabled=true
   WimaxEnabled=true
  NonfreeKernelModules: nvidia wl
  Package: network-manager 0.9.6.0-0ubuntu5
  PackageArchitecture: amd64
  ProcVersionSignature: Ubuntu 3.5.0-13.14-generic 3.5.3
  RfKill:
   0: brcmwl-0: Wireless LAN
        Soft blocked: no
        Hard blocked: no
  Tags:  quantal running-unity
  Uname: Linux 3.5.0-13-generic x86_64
  UpgradeStatus: No upgrade log present (probably fresh install)
  UserGroups: adm admin cdrom dialout lpadmin plugdev sambashare ssh
  nmcli-dev:
   DEVICE     TYPE              STATE         DBUS-PATH                         
         
   eth0       802-3-ethernet    connected     
/org/freedesktop/NetworkManager/Devices/1  
   eth1       802-11-wireless   unavailable   
/org/freedesktop/NetworkManager/Devices/0
  nmcli-nm:
   RUNNING         VERSION    STATE           NET-ENABLED   WIFI-HARDWARE   
WIFI       WWAN-HARDWARE   WWAN      
   running         0.9.6.0    connected       enabled       enabled         
disabled   enabled         disabled

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