The docstring of frame-background-mode says

    Don't set this variable with `setq'; this won't have the expected
    effect.

but doesn't say what you should in fact do.  Perhaps something like
below.  Unless frame-set-background-mode is meant to be internals ...

2013-08-31  Kevin Ryde  <user42@zip.com.au>

	* frame.el (frame-background-mode): Docstring describe
	frame-set-background-mode after setting and suggest
	custom-set-variables from .emacs.