SOLUTION: This was a bug in bash which is fixed in patch bash4.2-029.  See 
http://lists.gnu.org/archive/html/bug-bash/2012-07/msg00018.html

I build from source as follows:
  - downlaod bash-4.2.tar.gz from ftp://ftp.gnu.org/pub/gnu/bash/
  - extract
  - download patches bash42-001 through bash42-029 (actually I did all through 
037) from ftp://ftp.gnu.org/pub/gnu/bash/bash-4.2-patches/
 - apply patches
 - ./configure --prefix=/usr/local; make; make install

Using this /usr/local/bash fixes the problem -- tab completion on
environment variables works again.

Can these patches please be applied to the package in precise and oneiric?
Thanks!

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https://bugs.launchpad.net/bugs/778627

Title:
  In natty, bash completion now quotes shell variable references rather
  than expanding them

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