Same situation as Ace (above)
I upgraded today from 11.04 to 11.10 and am experiencing the same problem here 
[Invalid UTF-8].

michael@saturn:~
$ grep michael /etc/passwd
michael:x:1101:2011:Michael:/home/michael:/bin/bash

$ dpkg -s indicator-session|grep Version
Version: 0.3.6-0ubuntu2

$ env | grep LANG
LANG=en_US.UTF-8

Contrary to Felix Möller (felix-derklecks) above,  setting UID_MIN 500 in 
/etc/login.defs did NOT fix this problem.
$ grep UID_MIN /etc/login.defs 
UID_MIN                   500

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https://bugs.launchpad.net/bugs/834137

Title:
  user menu says [Invalid UTF-8]

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