NetworkManager starts dnsmasq with caching completely disabled so that
seems unlikely to be a problem with the NM spawned dnsmasq.
However the fact that adding the setting to /etc/dnsmasq.d/network-
manager fixed it for you, shows that you're not using NetworkManager's
dnsmasq but a system dnsmasq instead.
Can you confirm that you have the "dnsmasq" package installed and not
only "dnsmasq-base"?
If so, then that bug is invalid as when you install "dnsmasq" on your
system, that'll bypass NetworkManager's own instance and so will run
with the default dnsmasq settings (including caching).
** Changed in: dnsmasq (Ubuntu)
Status: New => Incomplete
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https://bugs.launchpad.net/bugs/1172467
Title:
Dnsmasq caches negative results if it starts before the network is up
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