Solved.

I hate comparing Linux (GNOME 2.20/Ubuntu 7.10) to Windows, but whenever I select and copy files in Linux, then navigate to a different folder within the same window and paste, it doesn't paste the files as if the clipboard wasn't persistent. In Windows Explorer, it does. The only workaround is opening two Nautilus windows, which is a little annoying.

Is this issue with Ubuntu, GNOME, or the X Window System? Is it deliberate or an inevitable part of the GUI architecture, or can I make it behave in the way I want, like Windows Explorer?

Does gnome provide a clipboard tool such as klipper in Kde?

If yes, is that clipboard tool running when you try to do copy/paste?

If it is running, did you go into that clipboard and select the item to paste?

Nothing visible (wouldn't fit with GNOME design goals), but I can copy text from a text editor, close the text editor and paste it into anything else fine. That proves the possibility of persistent file copying at least.

The OP problem sounds curious; I think it's a basic functionality that you can copy-paste files withing the same file browser window, and I'm fairly sure I've been doing that with Nautilus for a long time..of course I might be wrong, but at least it feels like there's something wrong with Nautilus or Gnome. Does cutting & pasting files work (within the same window)? It should too.

I would also try different methods: CTRL+C => navigate to another dir => CTRL+V, then trough the right-click menu (copy/paste) and see if any of them works. Could it just be that the file doesn't get copied, so there's nothing to paste? I mean, like it was said about text copy-pasting already, that the functionality is in Gnome (has been for long, as far as I know) and it should work.

Klipper can handle several "clipboard objects" at once, for example one can copy several texts and then choose the one from Klipper that is to be pasted. I'm not sure if Gnome has this feature, but surely it does handle at least one copy-paste of one format at a time - that's the minimum

I apologize - it works now. It never worked for me in Ubuntu 7.04, and on upgrading to 7.10 within the last few days I never checked that it did work because I assumed it was never a feature of Nautilus.

It does work as b0uncer described now. Perhaps it was a flaw in the input systems or a Nautilus bug, but it has been fixed on upgrading.