I recently upgraded from Ubuntu Feisty 7.04 to Gutsy 7.10.
The upgrade went reasonably well with no serious breakage worth mentioning … except my FAT formatted USB key would no longer mount. It kept giving an error about not liking the mount option usefree.
Here is the fix, from the Ubuntu forums:
Go into gconf-editor and navigate to /system/storage/default_options/vfat/mount_options
Remove the “usefree” option from the list.
Exit gconf-editor, and try hotplugging your drive again.
Your USB key should mount as expected now.