Welcome. This bug was introduced with the new Xorg in the 8.10 (Intrepid Ibex) release of Ubuntu. It had 2 effects: the default keyboard repeat rate was unusably high, and there was no obvious way to change the repeat rate. There were a few hacks which could effect at least partial fixes, the discussion of which you will find below.
The bug has been fixed upstream, and, in theory, will be included in the 9.10 (Karma Koala) release of Ubuntu. The fix has also been backported to the 9.04 (Jaunty Jackalope) release of Ubuntu. It does not seem like the fix will be backported to 8.10 (Intrepid).
Thus, those affected by this bug should install 9.04.
(If there are any continued difficulties, please file a new bug report.)
================== Old bug report ==================
go to System > Preferences > Keyboard > General
The controls under Repeat Keys are failing to properly adjust the timing of how fast keys are repeated when held down.
I filed under gnome, but a person there thinks its an xorg bug in ubuntu: http://bugzilla.gnome.org show_bug.cgi?id=550242 It has become quite clear that this is a problem with the xorg-evdev driver, and intrepids new hotplug architecture.
Here is a workaround for this:
Temporarily add the following to your xorg.conf:
Option "AutoAddDevices" "off"
Restart X, and you will be able to change the settings. Once changed, you can remove those lines from your xorg.conf (which is recommended since setting AutoAddDevices to off can interfere with your keyboard)
Another (and possibly better) workaround is to set the repeat rate manually, see this comment for directions: https://bugs.launchpad.net/ubuntu/+source/xserver-xorg-input-evdev/+bug/264196/comments/26
This bug may also be related to bug 278078