I'm getting the same thing. Debug output:

# cryptsetup --debug -v -y luksFormat /dev/sda3
# cryptsetup 1.1.3 processing "cryptsetup --debug -v -y luksFormat /dev/sda3"
# Locking memory.

WARNING!
========
This will overwrite data on /dev/sda3 irrevocably.

Are you sure? (Type uppercase yes): YES
# Allocating crypt device /dev/sda3 context.
# Trying to open and read device /dev/sda3.
# Initialising device-mapper backend, UDEV is enabled.
# Detected dm-crypt target of version 1.10.0.
# Timeout set to 0 miliseconds.
# Password retry count set to 0.
# Iteration time set to 1000 miliseconds.
# Password verification enabled.
Enter LUKS passphrase: 
Verify passphrase: 
# Formatting device /dev/sda3 as type LUKS1.
# Initializing crypto backend (using secure memory).
# Topology: IO (512/0), offset = 0; Required alignment is 4096 bytes.
# Generating LUKS header version 1 using hash sha1, aes, cbc-essiv:sha256, MK 
32 bytes
# PBKDF2: 278164 iterations per second using hash sha1.
# Data offset 2056, UUID 9161b59a-4a19-4dba-9c1a-1b405dfc5209, digest 
iterations 33875
# Updating LUKS header of size 1024 on device /dev/sda3
# Reading LUKS header of size 1024 from device /dev/sda3
# Adding new keyslot -1 using volume key.
# Calculating data for key slot 0
# Key slot 0 use 135822 password iterations.
# Using hash sha1 for AF in key slot 0, 4000 stripes
# Updating key slot 0 [0x1000] area on device /dev/sda3.
# DM-UUID is CRYPT-TEMP-temporary-cryptsetup-3043
# Udev cookie 0xd4d3b43 (semid 393216) created
# Udev cookie 0xd4d3b43 (semid 393216) incremented
# Udev cookie 0xd4d3b43 (semid 393216) incremented
# Udev cookie 0xd4d3b43 (semid 393216) assigned to dm_task type 0 with flags 0xe
# dm create temporary-cryptsetup-3043 CRYPT-TEMP-temporary-cryptsetup-3043 OF   
[16384]
# temporary-cryptsetup-3043: Stacking NODE_ADD (253,0) 0:6 0660
# dm reload temporary-cryptsetup-3043  OF   [16384]
# dm resume temporary-cryptsetup-3043  OF   [16384]
# Udev cookie 0xd4d3b43 (semid 393216) decremented
# temporary-cryptsetup-3043: Stacking NODE_READ_AHEAD 256 (flags=1)
# Udev cookie 0xd4d3b43 (semid 393216) decremented
# Udev cookie 0xd4d3b43 (semid 393216): Waiting for zero
# Udev cookie 0xd4d3b43 (semid 393216) destroyed
# temporary-cryptsetup-3043: read ahead is 256
# temporary-cryptsetup-3043: Setting read ahead to 256
# Udev cookie 0xd4da788 (semid 425984) created
# Udev cookie 0xd4da788 (semid 425984) incremented
# Udev cookie 0xd4da788 (semid 425984) incremented
# Udev cookie 0xd4da788 (semid 425984) assigned to dm_task type 2 with flags 0x0
# dm remove temporary-cryptsetup-3043  OF   [16384]
# Udev cookie 0xd4da788 (semid 425984) decremented
# temporary-cryptsetup-3043: Stacking NODE_DEL (replaces other stacked ops)
semid 425984: semop failed for cookie 0xd4da788: incorrect semaphore state
Failed to set a proper state for notification semaphore identified by cookie 
value 223192968 (0xd4da788) to initialize waiting for incoming notifications.
# Udev cookie 0xd4da788 (semid 425984) destroyed
# Key slot 0 was enabled in LUKS header.
# Updating LUKS header of size 1024 on device /dev/sda3
# Reading LUKS header of size 1024 from device /dev/sda3
# Releasing crypt device /dev/sda3 context.
# Releasing device-mapper backend.
# Unlocking memory.
Command successful.

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https://bugs.launchpad.net/bugs/840291

Title:
  Impossible to encrypt external USB 3.0 HD with Oneiric Beta

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