The bug is that the scanning program (simple-scanner, xsane, etc.) cannot detect the scanner. First thing, is there actually a scanner being detected? Here's another command that I've never used before, by the way:

$ sane-find-scanner
...
found USB scanner (vendor=0x04b8 [EPSON], product=0x0818 [USB MFP]) at libusb:001:005
...

 Ah, so there *is*! Let's check its permissions:

$ getfacl /dev/bus/usb/001/005
getfacl: Removing leading '/' from absolute path names
# file: dev/bus/usb/001/005
# owner: root
# group: lp
...

Clearly the scanner was assigned to user root and group lp. Simple workaround is to make sure that saned, the scanning daemon, is part of the lp group:

$ sudo adduser saned lp

And it worked. Of course, I never would have found out about this without the great comments posted on the bug's launchpad.net page.

Update: Spoke too darned soon. Still doesn't work in Xubuntu 11.10. But Ubuntu 11.10 on my netbook worked fine. The ridiculous part? The same thing happens with printing! Can't get it to work in xubuntu desktop, works fine with ubuntu netbook. Bah.

Update 2: By the way, Xubuntu 12.04 has zero problems with my printer/scanner. No need for any of these commands anymore!