I have the same issue on a AMD64 machine. Am running Nouveau video driver as 
the Nvidia 96 is not yet available.
I installed the Meerkat beta on day 1 and the applet worked then. Something 
'broke' it in regression.
Fascinating is also that the preferences (see screenshots) seem to have no 
affect on behaviour.
If anyone has any ideas on how to test further on this bug, plase let me know.
//Stefan

** Attachment added: "2 screenshots to show prefs dialog and GConf"
   
https://bugs.launchpad.net/ubuntu/+source/gnome-panel/+bug/642213/+attachment/1606821/+files/Screenshots.zip

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Workspace switcher applet displays stretched, in single row
https://bugs.launchpad.net/bugs/642213
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