GNU readline lets you move a word forward/backward using M-f and M-b (where M is usually the Alt key). But ever since upgrading to 12.04 it stopped working.
At first I tried disabling the "Key to show HUD" in Compiz, but it seems like that's not enough.
Any way around this?
In the Terminal menu -> Edit -> Keyboard Shortcuts -> Enable menu access keys.
This fixed the problem for me.