I'm having the same issues as well. And when I did manage to make a USB
disk, the persistent storage doesn't work whatsoever, so I keep losing
all of the settings every time I shut down.

I also am losing any new packages I add to the USB disk. It's highly
annoying because I'm trying to create customized live USB disks for an
office, and being unable to create new disks with 9.04 is problematic.
My current workaround is to run 8.10 in a VM and create the disks there.

-- 
USB Startup Disk Creator no longer works in Ubuntu 9.04
https://bugs.launchpad.net/bugs/366087
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