Alright, it looks like we've found the problem: You're running a
failsafe GNOME session. Log out, click the Sessions button, and switch
it back to regular GNOME then login and enable compiz via the Appearance
UI.
** Changed in: compiz (Ubuntu)
Status: Incomplete => Invalid
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ubuntu 10.04 beta desktop effects could not be enabled
https://bugs.launchpad.net/bugs/555393
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