I have experienced the same issue of not being able to change to any other mode 
than Managed with my Atheros card. I get the same error as above:
sudo iwconfig ath0 mode Master
 Error for wireless request "Set Mode" (8B06) :
     SET failed on device ath0 ; Invalid argument

It worked perfectly in Dapper and the config I have is identical in Edgy
as I pasted the contents of the old config to the new.

This is on a clean install of Edgy using linux-restricted-
modules-2.6.17-10-generic

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Cannot set modes other than 'Managed' on Atheros based wifi card
https://launchpad.net/bugs/62106

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