I seem to have a similar issue, my /etc/crypttab contains:
# <target name> <source device>         <key file>      <options>
CRYPT1         /dev/mapper/momo-crypt1   none            luks,timeout=30

/etc/fstab:
# <file system> <mount point>   <type>  <options>       <dump>  <pass>
/dev/mapper/CRYPT1 /media/CRYPT1 ext3 defaults  0       0

My System is DISTRIB_RELEASE=9.10, fully upgraded from 9.04, using LILO
since 9.04 due to LVM2 root fs.


During system boot, "Starting early crypto disks" (probably from 
/lib/cryptsetup/cryptdisks.functions sourced in 
/etc/init/cryptdisks-enable.conf?) prompts for the passphrase for CRYPT1, a 
second later gdm starts and offers a login prompt.

When I switch back to tty1 with Ctrl+Alt+F1, I have the same situation
as Pete - I usually need several attempts to enter the passphrase.

Kind Regards,
Flummy

-- 
passphrase for encrypted home partition not being read
https://bugs.launchpad.net/bugs/484272
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