According to the documentation, LinkedList<E> implements Queue<E>, and this should compile. I was able to compile this code with javac 1.5.0_08. Also, you can take the generics out of the picture and the problem remains the same (it won't compile, even without generics).
My question is: anyone defends the position of this not being a bug?
any top level type named n declared in another compilation unit of p.
any type named n imported by a type-import-on-demand declaration in c.
any type named n imported by a static-import-on-demand declaration in c.
The only conclusion is that you have imported a Queue class other than java.util.Queue or imported a LinkedList other than java.util.LinkedList or both.
Do you have another class on your classpath such as java.util.Queue or java.util.LinkedList which is overriding the JDK one?