My path to this bug:

1) System->Preferences->Network Proxy
2) Manual Proxy Configuration
3) Set up authenticated proxy for all protocols
4) Ignore some hosts
5) Apply System-Wide...

Contents of "/etc/environment" then only contain
http_proxy="http://10.10.40.10:80";.

Should be something like:

http_proxy="http://u...@password:10.10.40.10:80/";
no_proxy="localhost,127.0.0.0/8,*.local"

Lame bug!! Please do fix for us :-)

(NOTE... don't mind disclosing that proxy IP, it's a non-routable
address anyway, at work to boot! So, please no comments about that)

-- 
Setting the network proxy doesn't change the synaptic proxy settings 
(gnome-network-preferences) for authenticated proxies
https://bugs.launchpad.net/bugs/300271
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