I am also suffering this problem in Ubuntu 12.10. 
Commenting out the sourcing of bash-completion managed to fix it, but the 
problem is that it disables all of its advantages. The problem must be in one 
of the various files at /usr/share/bash-completion/completions ,I'd bet. But 
debugging that until finding the culprit would be a task of true patience.

I tried to build bash manually and it always does the same thing unless
I disable sourcing bash-completion.

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https://bugs.launchpad.net/bugs/778627

Title:
  In natty, bash completion now quotes shell variable references rather
  than expanding them

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