Public bug reported:

Bug found in Ubuntu 9.10 Karmic Alpha 3

When attempting to drag the "Terminal" application icon from the
Applications menu to the top Panel, the icon flashes and then
disappears, instead of following the mouse up to the Panel and staying
there.  To install the icon to the panel, I had to right-click on the
panel, select "Add to Panel", and select the application from the menu.
This drag-and-drop selection worked in all of the previous releases.

** Affects: ubuntu
     Importance: Undecided
         Status: New

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Application buttons can't be dragged from Applications menu to top Panel.
https://bugs.launchpad.net/bugs/406657
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