Im also using ecryptfs. I tried to reproduce it in the same way like you
did it now, but it works fine for me. The default directory remains
~/torrents/ . I am also on Ubuntu 12.04 using transmission version 2.51.

What is the output of your

transmission-gtk --version

?

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You received this bug notification because you are a member of Desktop
Packages, which is subscribed to transmission in Ubuntu.
https://bugs.launchpad.net/bugs/1130442

Title:
  Starting a new torrent saves files in folder of previous torrent.

Status in “transmission” package in Ubuntu:
  New

Bug description:
  After starting a torrent that contains a folder, any subsequently
  started torrent downloads are saved within this folder.

  (Edit -> Preferences -> Downloading -> Location -> 'Save to location'
  is also updated to this new folder)

  This leads to infinitely nested downloads.

  Eg:

  └── Download1
      ├── Download1.avi
      ├── sample.avi
      ├── Download2
      │   ├── Download3
      │   │   ├── Download3.avi
      │   │   ├── Download3.jpg
      │   │   └── Download3.txt
      │   ├── Download2.mp4
      │   ├── Download2.jpg
      │   └── Download2.txt
      └── Download1.txt

  
  This bug has been hanging around for a long time.

  ProblemType: Bug
  DistroRelease: Ubuntu 12.04
  Package: transmission-gtk 2.51-0ubuntu1.1
  ProcVersionSignature: Ubuntu 3.2.0-37.58-generic 3.2.35
  Uname: Linux 3.2.0-37-generic x86_64
  ApportVersion: 2.0.1-0ubuntu17.1
  Architecture: amd64
  Date: Wed Feb 20 00:01:30 2013
  EcryptfsInUse: Yes
  ExecutablePath: /usr/bin/transmission-gtk
  InstallationMedia: Ubuntu 12.04 LTS "Precise Pangolin" - Beta amd64 (20120328)
  MarkForUpload: True
  SourcePackage: transmission
  UpgradeStatus: No upgrade log present (probably fresh install)
  XsessionErrors: (compiz:2200): GConf-CRITICAL **: gconf_client_add_dir: 
assertion `gconf_valid_key (dirname, NULL)' failed

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