Hey,
Just noticed some of the things mentioned above in my computer (under Ubuntu Unity 11.10), and after playing a bit, I saw the following thing (that should probably help to debug this):
When the cursor is moving, the x-buttons don't seem to work. but if you keep the mouse perfectly still (the simplest way is just to hold it in the air) then the buttons do work!
Hope that helps.
Meanwhile - (until bug will be fixed) I'll just keep on this hovering-mouse-act...