> -I need to get this working, is not an understatement.

There is a workaround. The following worked for me (I needed a loop
partition, change things accordingly). I'm NOT sure that I didn't do
something else not written here (those are my notes, I forgot what I
did).
Of course we all hope that it will work out of the box, one day, but
in the meanwhile, try your own fix.

dd if=/dev/urandom of=.aes.img bs=512k count=256
chmod o-rwx .aes.img
chmod g-rwx .aes.img
sudo losetup /dev/loop0 .aes.img
sudo modprobe dm-crypt
sudo cryptsetup --verbose --verify-passphrase luksFormat /dev/loop0
sudo cryptsetup luksOpen /dev/loop0 aes
ls -l /dev/mapper/
sudo mkfs.ext3 -j -m 1 /dev/mapper/aes
mkdir .aes
chmod o-rwx .aes
chmod g-rwx .aes

-- 
cryptsetup / LUKS won't work
https://bugs.launchpad.net/bugs/58102
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