I am using Debian Testing and Gnome Flashback (but it behaves the same in standard Gnome Shell).

It gives me plain white background, and I can't set my own. Also, the settings dialog for background looks funny:

Any ideas?

Edit: I have noticed I got background image back when I turned off "Nautilus controlling desktop". Of course, I no longer see desktop icons this way.

Update: I have installed Ubuntu (with Unity), keeping my /home partition. The same problem appears in Unity! I can't set desktop background.