Various people and distributions set their PS? strings in different places. The most common places are /etc/profile, /etc/bashrc, ~/.bash_profile, and ~/.bashrc . Johan Kullstam (johan19 at idt dot net) writes:
the PS1 string should be set in .bashrc. this is because non-interactive bashes go out of their way to unset PS1. the bash man page tells how the presence or absence of PS1 is a good way of knowing whether one is in an interactive vs non-interactive (ie script) bash session.
the way i realized this is that startx is a bash script. what this means is, startx will wipe out your prompt. when you set PS1 in .profile (or .bash_profile), login at console, fire up X via startx, your PS1 gets nuked in the process leaving you with the default prompt.
one workaround is to launch xterms and rxvts with the -ls option to force them to read .profile. but any time a shell is called via a non-interactive shell-script middleman PS1 is lost. system(3) uses sh -c which if sh is bash will kill PS1. a better way is to place the PS1 definition in .bashrc. this is read every time bash starts and is where interactive things - eg PS1 should go.
therefore it should be stressed that PS1=..blah.. should be in .bashrc and not .profile.
I tried to duplicate the problem he explains, and encountered a different one: my PROMPT_COMMAND variable (which will be introduced later) was blown away. My knowledge in this area is somewhat shaky, so I'm going to go with what Johan says.