From the app:
Profile Settings include object permissions, field-level security, and layouts, that map to the installer’s selected profiles during installation.
The profile itself will not be installed.
In other words, packaging profiles will not create a new profile in the destination org.
Instead it allows you to map the new profile settings to an existing profile. If you want to move profiles, I suggest using the IDE.
Hope that helps,
Message Edited by shillyer on 07-07-2009 02:51 PM