Why are letters overlapping in the terminal?

Turns out the ttf-ubuntu-font-family package somehow didn't get installed. Immediately after installing that package, the terminal font switched to the Ubuntu Monospace font and everything was readable again.

Open your terminal Go to Edit-->Profile Preferences and in general tab check "Use System fixed width font"

I have seen this kind of problem in my friend's gnome terminal.. just go to edit --> profiles and change the settings of the font of your terminal.. it should solve your problem.. :)