I also have the same problem.
Before upgrading to Intrepid (from Hardy Heron), it was working fine. Now it 
keeps poping for the passkey.

My hardware:

1 - Laptop
Toshiba U300-130
04:00.0 Network controller: Intel Corporation PRO/Wireless 4965 AG or AGN 
[Kedron] Network Connection (rev 61)

2 - Router
Fon with WPA2

Software:
Fresh install of Ubuntu 8.10 32bits with the latest upgrades including backports
Linux jmachado-ubuntu 2.6.27-7-generic #1 SMP Thu Oct 30 04:18:38 UTC 2008 i686 
GNU/Linux

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[iwl*] intel drivers take overly long to associate to WPA for some hardware
https://bugs.launchpad.net/bugs/263963
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