Problem:
I had a problem with designer in qt 4.2.1. I could drag a widget from the toolbox but it would disappear when dropped on a form. I also had this error in the console:
Xlib: extension "SHAPE" missing on display

Solution:
I added the following line to the modules section of my xorg.conf:
Load "extmod"

This loads a bunch of basic extensions including the shape extension. Now I can drag and drop properly in designer.

Hope this helps anyone who was having this same problem.