Thanks WSW, it worked!

Curiously, the file ~/.gnome2/session was not visible when I was in Safe
GNOME mode. Perhaps it's only generated after a regular login. I had to
log into a regular session first, to see this file. I also had to do
View > Show Hidden Files in the Nautilus File Browser to see the
~/.gnome2 directory at all. I renamed it to ~/.gnome2/session.bak. Then,
I restarted X using Ctrl-Alt-Backspace, and logged in to a regular
session (i.e. _not_ Safe GNOME). And the problem seems to be gone!

By the way, I had speculated earlier about a relationship between this
bug and a closed-source video driver (ATI). This guess may have been
wrong. I removed this closed-source video driver using Applications >
Add/Remove (and then had to figure out how to manually restore the
previous version of /etc/X11/xorg.conf -- but that's another issue). In
any event, going back to the Open Source video driver did not help the
Gnome Panels issue.

In contrast, WSW's solution seems better so far.

-- 
Top and Bottom Screen Panels Stopped Working Properly in Ubuntu Feisty
https://bugs.launchpad.net/bugs/109760
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