Tried it again... And it worked.

Differences: 
  Rather than working from a downloaded 10.04LTS image, I tried it from a CD as 
the source.
  Rather than starting usb-creator-gtk from the System menu, I started it from 
a command line window.
  Had some space committed to a 'file system' area, rather than letting the 
entire 4G USB key be the drive.
     (allocated 2G to data, remaining (about 2.3G) went to the install.

Yes, changing multiple things at once doesn't allow for much real analysis, but 
I thought I would report it.
  Still seems odd.

Thanks ...

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https://bugs.launchpad.net/bugs/529366

Title:
  Regression: usb-creator-gtk fails to set the boot flag on the partition and 
exits.

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