This occurs when Compiz is enabled — you need to change the number of desktops through the Compiz Config Settings Manager (CCSM)
To work around the issue, install ‘ccsm’, then under System->Preferences->Look
& Feel choose “CompizConfig Settings Manager”. In the new window choose
“General Options” and from the tab list choose “Desktop Size” and change the
top slider to how many workspaces you need. This may not change the number of
workspaces immediately – you may need to log out and log in again.