Comment 71 for bug 621927

Correct, I just checked with my freshly installed Xubuntu 10.10 at work and Xfce4-terminal shows xterm, TTY says linux. But on my PC at home, both show Linux and Xfce4-terminal has problems. It does have xterm set as TERM variable. This variable is not accepted. I changed it to linuz, env still shows linux.
My laptop has the same problem and it too was upgraded from 10.04 to 10.10 and fully updated. I can of course add a work-around as described above that exports TERM in my .bashrc, but that doesn't fix the actual bug. I really wonder why the variable isn't set by xfce4-terminal.