The --title flag for gnome-terminal no longer works under RH 6.2; it uses the default option username@host:current-working-directory under all circumstances.
This is not a bug. --title is overridden by PROMPT_COMMAND set via /etc/bashrc.
I agree it's not a bug, --title affects the initial title, if you have bash set up to override the title then that's what's supposed to happen.