Confirmed, it's due to this update:
nautilus (1:2.32.2.1-0ubuntu10) natty; urgency=low
* 16_desktop_menu_export.patch: Updated menus shown in desktop window
to make them more reasonable being on the desktop. (LP: #692194)
** Changed in: nautilus (Ubuntu)
Importance: Undecided => High
** Changed in: nautilus (Ubuntu)
Assignee: (unassigned) => Ted Gould (ted)
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https://bugs.launchpad.net/bugs/742982
Title:
regression: can not resize icons on desktop
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