Never mind. Turned out my problem was that I have installed shutter at
one point, even after removing it the keybinding persists.  Here is the
solution  in case anyone encounters the same problem.
http://askubuntu.com/questions/30701/keyboard-shortcuts-not-working-
after-removing-shutter/42435#42435

Now everything works. Don't know if OP is having the same problem.

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https://bugs.launchpad.net/bugs/1012952

Title:
  Screenshot is not saved in ~/Pictures, despite reported upstream GNOME
  behaviour.

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