Okay....   so this was caused by compiz-fusion and the cube plugin...
BUT another bug caused me to not realize it.

To re-create the bug:
1) have a transparent panel
2) right click on panel, go to propertis
3) view "background" tab
4) Click "none" option - panel changes to some default color.
5) Click the color option again... panel won't change from default theme color. 
 You have to kill gnome-panel and restart it to make it pick up the new 
settings.

-- 
8.10 - panels display as white instead of transparent
https://bugs.launchpad.net/bugs/340335
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