When you have a stack of buckets anything over 1 bucket and attempt to pick up water with the stack. The stack will infinitely duplicate. I'm using bukkit v2281 This could be a bug with the stackable items plugin I use, just thought I would post it here to see if anyone else notices this.
It sounds like the latter, rather than a bug with Bukkit. I just tried this, and it's working fine. Before you report a bug you should try it without plugins to make sure it is in fact vanilla.