Same error here. I am on karmic koala, kernel:
Linux netclient-64bit 2.6.31-14-server #48-Ubuntu SMP Fri Oct 16 15:07:34 UTC 
2009 x86_64 GNU/Linux

I built xsplash from sources, version:
xsplash-0.8.5

and still get the same mistake.
Will there be a fix for this bug soon?

I will have to switch back to Usplash, I assume...

-- 
je...@aztec:~$ xsplash --help        ** ERROR **: Failed to setresgid to `gdm'  
    aborting... Aborted (core dumped)
https://bugs.launchpad.net/bugs/474712
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