This is a known upstream issue:
http://bugzilla.gnome.org/show_bug.cgi?id=346857
** Changed in: file-roller (Ubuntu)
Importance: Untriaged => Medium
Assignee: (unassigned) => Ubuntu Desktop Bugs
** Bug watch added: GNOME Bug Tracker #346857
http://bugzilla.gnome.org/show_bug.cgi?id=346857
** Also affects: fileroller (upstream) via
http://bugzilla.gnome.org/show_bug.cgi?id=346857
Importance: Unknown
Status: Unknown
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Creating 7z archives of folders through nautilus is broken
https://launchpad.net/bugs/51060
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