What you see above is how my desktop looks now. You need to be using gnome to get this working.
Nautilus draws the desktop (including the icons) for you in gnome by default. We have to tell it to stop doing that, so we can do the matrix animation in its place. Nautilus can be configured using gconf.
gconftool-2 --type bool --set /apps/nautilus/preferences/show_desktop false
Now that we have the desktop to ourselves, let us ask xscreensaver ‘glmatrix’ to start drawing itself in the desktop window (‘root’ window).
If you want the animation every time you log in, open “~/.config/autostart/glmatrix.desktop” in your text editor and paste the following.
[Desktop Entry] Version=1.0 Encoding=UTF-8 Name=No name Name[en_IN]=Desktop matrix Exec=/usr/lib/xscreensaver/glmatrix -root X-GNOME-Autostart-enabled=true
(suggested by ElecBoy) After playing around, if you want to get back to your default desktop, do
gconftool-2 --type bool --set /apps/nautilus/preferences/show_desktop true && nautilus