I have the same problem on Intrepid, with samba version: 2:3.2.3-1ubuntu3.3. 
I quickly fixed it (thanks to a colleague) by commenting out the line

# auth  optional                        pam_smbpass.so migrate

from the file /etc/pam.d/common-auth


** Changed in: samba (Ubuntu)
       Status: Incomplete => Confirmed

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https://bugs.launchpad.net/bugs/302092
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