grub-pc(grub2) fails to save last OS to reboot the same OS

I modified the /etc/default/grub file to set grub to save the last OS booted as default and to automatically select the same OS on reboot.

This fails to work, and alway boots the first (0) on the list.

:~$ lsb_release -rd
Description: Ubuntu 11.10
Release: 11.10

:~$ apt-cache policy grub2
grub2:
  Installed: (none)
  Candidate: 1.99-12ubuntu5
  Version table:
     1.99-12ubuntu5 0
        500 http://mirror.math.ucdavis.edu/ubuntu/ oneiric/universe i386 Packages

ProblemType: Bug
DistroRelease: Ubuntu 11.10
Package: grub-pc 1.99-12ubuntu5
ProcVersionSignature: Ubuntu 3.0.0-12.20-generic 3.0.4
Uname: Linux 3.0.0-12-generic i686
NonfreeKernelModules: wl
ApportVersion: 1.23-0ubuntu3
Architecture: i386
Date: Thu Oct 27 16:01:25 2011
InstallationMedia: Ubuntu 11.04 "Natty Narwhal" - Release i386 (20110427.1)
ProcEnviron:
 PATH=(custom, no user)
 LANG=en_US.UTF-8
 SHELL=/bin/bash
SourcePackage: grub2
UpgradeStatus: Upgraded to oneiric on 2011-10-25 (2 days ago)