This may be a bug in S3Fox, because it is generally able to delete items recursively. However, I'm not sure if I've ever tried to delete a whole bucket and its contents at once.
The JetS3t project, as mentioned by Stu, includes a Java GUI applet you can easily run in a browser to manage your S3 buckets: Cockpit. It has both strengths and weaknesses compared to S3Fox, but there's a good chance it will help you deal with your troublesome bucket. Though it will require you to delete the objects first, then the bucket.
Disclaimer: I'm the author of JetS3t and Cockpit
