I had this same problem and was able to fix it by taking out the flash
drive and putting it in another slot.

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https://bugs.launchpad.net/bugs/1070331

Title:
  Error formatting volume

Status in “seahorse” package in Ubuntu:
  Confirmed

Bug description:
  When I try to format my USB Pen Drive with "Disks program" (v. 3.6.1)
  started from "Dash Home" in Ubuntu 12.10, I get this error message:

  Error erasing device: Error opening device /dev/sdf1: Device or
  resource busy (udisks-error-quark, 0)

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