"The application "gnome-panel" attempted to change an aspect of your configuration that your system administrator or operating system vendor does not allow you to change. Some of the settings you have selected may not take effect, or may not be restored next time you use the application."
Clicking the "details" button brings up the following message: "No database available to save your configuration: unable to store a value at key '/apps/panel/toplevels/top_panel_screen0/expand', as the configuration server has no writable databases."
I had messed up my permissions in the .gconf directory that stores many of Gnome's settings. In my case the execute permission was missing from the folder and all files within it so Gnome gave that error.
To fix this run the following commnd on your gconf directory. It will give your user read, write and execute permissions to the gconf folder and all files/folders within it which should solve the problem.