Okay, so I think I've figured out the magic (which shouldn't be necessary).
To get the little circle minus sign button to work:
-- attach an external monitor
-- select "View -> Full Screen"
-- select "View -> Use All Displays in Full Screen"
then the little minus sign option in the mini bar is available and I can minimize my full screen VM window and the behavior of the Mac virtual desktops is restored to proper behavior (they don't move around and Ctrl-# keyboard shortcuts work properly)!
Now, shouldn't that behavior be the case for when using only a single display (as in the laptop LCD) when you are not connected to an external monitor?
Seems like a bug...
p.s. I am using Fusion 5.0.3 on a MacBook Pro running Mac OS X 10.8.3. Windows 8 is running inside the VM.