Thanks, Thiago. That helped. Wrote a new partition table to the USB drive, 
created a FAT32 partition, used sudo usb-creator-gtk --iso=ubuntuxxx.iso, told 
it to erase drive, than it worked.
Can't believe usb-creator is still full of problems.
Using 11.10 64 bits here, fully updated.

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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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