I have several Arduino Uno rev3 with little LED shields (12 LEDs directly connected to digital out and GND). I have the same problem on all of them:
upload fails from Arduino Software with error
avrdude: stk500_recv(): programmer is not responding
if the shield is connected,
runs without problems without the shield.
The pin numbers 0 and 1 on the board are responsible for your upload of the program into the hardware. that's why you see the leds which are present on board going on and off alternatively. So your shield is (technically overriding) interrupting the upload process. So you can upload the program then work on with your current shield. In case of options in few of the shields, you need to change the (plastic balck colour) switch on it to programming mode, then revert back after uploading.
Hope it helps!
Regards,
Bala
Arduino India,
Tenet Technetronics. bala@tenettech.com
ph: 080 42103124