I'm running Ubuntu 7.04 on my home server, and for some reason today the backspace key stopped working correctly in screen. Whenever I pressed it, it would give a 'Wuff Wuff' error! It turns out that screen was treating it like the delete key instead, and so since there were no characters in front of the cursor, it was giving an error. To fix this however, is relatively straightforward:
First edit your .bashrc file and add an alias for screen:
$ vim ~/.bashrc
alias screen='TERM=screen screen'
Then run:
$ source ~/.bashrc
And that's it!