Spaces is a virtual desktop implementation by Apple that allows you to organize content in up to 16 separate desktop "workspace" environments to prevent window and application clutter. When active you can invoke Spaces by pressing an assigned hotkey, or by moving your mouse to an assigned hot-corner of the display.
When this happens the available spaces will show on the display and you can move your content or the spaces themselves around to organize your workflow. While convenient, there may be times when Spaces will capture keyboard input for use with moving between spaces, but then not release the keyboard input. As a result, the system passes all keyboard input to Spaces so only Spaces-related functions work, such as switching between Desktops, or viewing all spaces on screen.
The system is not frozen, and Applications and Spaces both seem to be working fine (blinking cursors in text fields, and other activity occurs indicating proper application function); however, the keyboard input will only work to change spaces.
Fixing the issue
If this happens, you should still be able to use the mouse so try opening Activity Monitor and using it to select and force-quit the Dock. This should clear the problem; however, if it does not then access the Apple menu and log out (force-quitting applications if needed).
Alternatively, you can try forcing the system to reload the keyboard by changing its USB slot. USB devices are given a location ID, and changing the port will change this ID number, resulting in the system altering its driver configuration to accommodate the new location.
Preventing the issue
Unfortunately there is no specific cause for this problem that has been identified; however, you can still try a number of options to alter relevant settings and configuration files in hopes that refreshing these will keep the problem from happening.
Change Spaces Settings
Try toggling between various Spaces settings in the "Expose & Spaces" system preferences by adding more rows or columns of spaces, changing application assignments, or changing the keyboard and mouse shortcuts being used to activate and control Spaces.
Test in another user account
Create a new user account, enable Spaces, and then test the feature when in that account. This will help you determine if the problem is system-wide or account-specific. It is best to use a fresh account so you are certain all settings are fresh and come from the current system configuration. This account and all its data can be removed after you are finished troubleshooting.
If the problem is based in the user account after testing in other accounts, then try removing relevant property list files and then logging out and logging back in. Some of the ones associated with Spaces are those for the keyboard bindings, the Dock (which runs Spaces), and Universal Access (integrates with keyboard bindings). These files will be located in the /username/Library/Preferences/ folder and be called the following:
Keep in mind that removing the Dock-related files will result in the default system Dock the next time you log in (location, size, and items in the Dock). Therefore, be sure to write down the applications you have in your Dock, and other relevant settings before removing these files.
In addition to the aforementioned property lists, you might try removing the following files. They control items like keyboard backlighting behaviors and the loaded system menu extras, so their association with Spaces and hotkeys is a bit of a stretch but they may still help. You may need to re-enable your menu extras after removing these files.
Clearing caches and running permissions fixes on the boot drive may help the situation. If you have a maintenance utility like AppleJack, MacKeeper, OnyX, or Snow Leopard Cache Cleaner then run it to clear user and system caches. See our general maintenance instructions for a full routine on clearing temporary items from your system.
Reapply latest combo updater
Download the latest combo updater for your version of OS X from Apple's support site. Then run a general maintenance routine on the system and apply the updater when booted into Safe Mode (hold Shift at startup). After running the installer, use Disk Utility to perform a permissions fix on the boot drive (ignore any errors or warnings).
Lastly, you can try reinstalling OS X, which can be done by using an Archive and Install procedure with Leopard, or the default install with Snow Leopard (OS X 10.6 does an archive and install by default). This will preserve your user accounts, data, applications, and settings, though some applications may need to be reconfigured and a few may need to be reinstalled after doing this. A full reinstall should clear any corruption with system files that could be contributing to the problem.