I don't know whether anybody is investigating this bug, but here's some more info: 

With 9.04's usb-creator, I wrote the Ubuntu 8.04 iso to a 1 GB USB Stick, with the persistent slider completely to the right (about 250 MB space). The writing process seemed to complete to 100%, but trying to boot from the stick ended in a BusyBox prompt. :-(

I'm not sure, but it could be that 9.04's usb-creator can not handle fully using a (any) USB stick.




-- Starting up at 20:10:56 --
[20:10:56] /var/lib/python-support/python2.6/dbus/connection.py:242: DeprecationWarning: object.__init__() takes no parameters
  super(Connection, self).__init__(*args, **kwargs)
[20:10:56] new device:
{'udi': '/org/freedesktop/Hal/devices/volume_uuid_10C8_6F21', 'capacity': dbus.UInt64(1010794496L), 'uuid': '10C8-6F21', 'device': '/dev/sdc1', 'mountpoint': '/media/BSIX', 'fstype': 'vfat', 'free': 1004027904L, 'label': 'BSIX'}
[20:10:56] adding: /dev/sdc1
[20:10:56] new device:
{'udi': '/org/freedesktop/Hal/devices/volume_uuid_4C4B_F586', 'capacity': dbus.UInt64(2029518336L), 'uuid': '4C4B-F586', 'device': '/dev/sdb1', 'mountpoint': '/cdrom', 'fstype': 'vfat', 'free': 44990464L, 'label': ''}
[20:10:56] adding: /dev/sdb1
[20:11:40] mounting /media/ntfs/mijnDownloads/ubuntu-8.04.2-desktop-i386.iso
[20:11:40] ['mount', '-t', 'iso9660', '-o', 'loop,ro', '/media/ntfs/mijnDownloads/ubuntu-8.04.2-desktop-i386.iso', '/tmp/tmpqi5IsN']
[20:11:40] updating dest_status as part of update_row_state
[20:11:40] ['umount', '/tmp/tmpqi5IsN']
[20:11:40] ['rmdir', '/tmp/tmpqi5IsN']
[20:11:58] Installing...
[20:11:58] Source CD: /media/ntfs/mijnDownloads/ubuntu-8.04.2-desktop-i386.iso
[20:11:58] Destination disk: /dev/sdc1
[20:11:58] Persistence size: 272158720 B
[20:11:58] Marking partition 1 as active.
[20:11:58] installing the bootloader to /dev/sdc.
[20:11:58] ['dd', 'if=/usr/lib/syslinux/mbr.bin', u'of=/dev/sdc', 'bs=446', 'count=1', 'conv=sync']
[20:11:59] installing the bootloader to /dev/sdc1.
[20:11:59] ['syslinux', '/dev/sdc1']
[20:12:14] ['parted', '-s', dbus.String(u'/dev/sdc'), 'set', u'1', 'boot', 'on']
[20:12:15] ['mount', '-o', 'loop,ro', '/media/ntfs/mijnDownloads/ubuntu-8.04.2-desktop-i386.iso', '/tmp/tmpEUBi4g']
[20:12:15] ['rm', '-rf', '/media/BSIX/autorun.inf']
[20:12:15] ['rm', '-rf', '/media/BSIX/casper']
[20:12:15] ['rm', '-rf', '/media/BSIX/dists']
[20:12:15] ['rm', '-rf', '/media/BSIX/install']
[20:12:15] ['rm', '-rf', '/media/BSIX/isolinux']
[20:12:15] ['rm', '-rf', '/media/BSIX/md5sum.txt']
[20:12:15] ['rm', '-rf', '/media/BSIX/pics']
[20:12:15] ['rm', '-rf', '/media/BSIX/pool']
[20:12:15] ['rm', '-rf', '/media/BSIX/preseed']
[20:12:15] ['rm', '-rf', '/media/BSIX/README.diskdefines']
[20:12:15] ['rm', '-rf', '/media/BSIX/ubuntu']
[20:12:15] ['rm', '-rf', '/media/BSIX/umenu.exe']
[20:12:15] ['rm', '-rf', '/media/BSIX/wubi.exe']
[20:12:15] ['rm', '-rf', '/media/BSIX/.disk']
[20:12:15] ['rm', '/media/BSIX/casper-rw']
[20:12:15] ['/usr/share/usb-creator/install.py', '-s', '/tmp/tmpEUBi4g/.', '-t', '/media/BSIX', '-p', '272158720']
[20:18:05] Unmounting source volume.
[20:18:05] ['umount', '/tmp/tmpEUBi4g']
[20:18:05] ['rmdir', '/tmp/tmpEUBi4g']
[20:18:05] Install command exited with code: 0
ubuntu@ubuntu:/media/ntfs/mijnDownloads$