This bug was fixed in the package unity-greeter - 0.1.0-0ubuntu1

---------------
unity-greeter (0.1.0-0ubuntu1) oneiric; urgency=low

  * New upstream release:
    - Fix greeter running in loop when greeter-hide-users=true (LP: #851477)
    - Remember the last selected user between logins (LP: #827898)
    - Select correct session when logging in manually
    - Fix non-translation of password prompt
    - Resize background when resizing window
    - Move/resize window when monitors changed
    - Disable xrandr gnome-settings-daemon plugin - always mirror the displays
 -- Robert Ancell <[email protected]>   Tue, 27 Sep 2011 14:19:02 
+1000

** Changed in: unity-greeter (Ubuntu)
       Status: Fix Committed => Fix Released

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https://bugs.launchpad.net/bugs/851477

Title:
  greeter-hide-users=false breaks the unity greeter

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