Can't change my username to my email address

I am experiencing a problem that looks fairly unique. I've searched all around and haven't found any similar cases.

I have an iTunes account with username albedoa associated with a verified email address which I will refer to as email. I know that iCloud will require a username in email format, so I wanted to switch my username to email. In my account settings, I saw this option:

Make your Apple ID and primary email address one and the same.

Your Apple ID will be easier to remember, and your account will be easier to access and manage.

Change your Apple ID and primary email address to:

email

I clicked the Submit button, and nothing happened. I tried it in both Chrome and Safari, but each time the page would reload and my username would still be shown as albedoa. If I tried to edit the username directly to reflect email, I received the following error:

This email address is already in use or you may already have an Apple ID associated with this email address. Please try again or sign in using your existing Apple ID.

So I made a new account with the username email and associated it to the email address email (the same as the other account). However, I cannot install my purchased apps using that account because they were purchased using my other account. What is going on here? How am I to retain my purchases when iCloud is activated? I don't have a MobileMe account.

Thanks!