This morning I noticed that the latest builds of Nautilus decided to set my home directory as the Desktop directory, so when I logged I had icons smeered everywhere :(
It seems that a new option has been created "desktop_is_home_dir", which
should default to ~/Desktop, and most likely does for new users, but existing users this would seem to default to true.
To solve this - simply run gconf-editor, and select app->nautilus->preferences and disable the "desktop_is_home_dir" option, then relogin.
Simple, but took me asking on #gnome and hunting in Bugzilla to find it...
links: digg this del.icio.us technorati reddit