Actually, I think that's a duplicate of bug 475974. What happens is that the first time you open the group settings dialog, the GID is set to 0, and group creation fails. Just close and launch the dialog again, and it works. This is fixed for a long time with users-admin 2.28.2, but Karmic only has 2.28.1.
Sadly, I don't think somebody is going to work on a backport of the (trivial fix) now. Quoting Martin Pitt on the other report:
> If we have another g-s-t SRU in karmic, this can be slipped in,
> but I think it's not serious enough to warrant the effort of an SRU by itself.
Thanks for testing anyway, I believe that in Lucid users-admin will be much more reliable.