After upgrading to Karmic, I too was having a heck of a time trying to figure out what it was that was causing me the issues with the mouse scroll to not work to change desktops, as I had in the past..
[SOLVED] Switching workspace with mouse scroll wheel? - Ubuntu Forums
Here are some screens. It's the viewport switcher plugin under desktop section. Buttons 4 and 5. With button 2 for the initiate action button.