UPDATE: I figured the problem was due to messed up compiz settings. Disabling and enabling compiz (Right Click on Desktop>Change Desktop Background>Visual Effects None and then again to Normal or Extra) fixed it.
The older post follows.
[HOWTO] Reset gnome-panel and applets to default
September 1st, 2010 Permalink
If you have messed up gnome-panel settings or applets, you can simply reset it to default. To do so, just run the following commands from the terminal (Alt+F2->gnome-terminal):
