I know this is an old thread, but it seem this problem still exists on Ubuntu 
14.04. I recently did an install on an affected computer and I documented the 
process so I could make this instruction for the benefit of anyone else having 
the same issue:
https://github.com/agerwick/RT28XX-RT539X-Linux-driver
This repo also contains the driver itself, as it seems Ralink/Mediatek keeps 
moving it around so some users have trouble finding it.

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https://bugs.launchpad.net/bugs/1173759

Title:
  Ubuntu 13.04 can detect wi-fi but can't connect

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