I've spent a few minutes playing around with the civilization generator, and in addition to the [ failed to generate ], I've also seen it generate names as: How about "______ "? (with whatever name it had generated where the ______ is). I guess the AI is being indecisive sometimes.
Two other issues:
Choosing an icon picture and choosing a foreground picture (not generating them) seems to result in both being set to use whichever image you chose last, which results in one of them being squashed or stretched in the display.
When you DO generate a picture, it doesn't always seem to generate one - but sometimes if you generate a different faction after that, among the pictures presented will be one that was obviously generated to match the previous faction (and none that are appropriate to the new one).