I can reproduce the problem in both SQL 2008 R2 and SQL 2005 SP3

I have read in several places that default settings for a new db should be based on model, but it appears this only happens by clicking new database in SQL Management studio UI and not from a script e.g. CREATE DATABASE [MyDb].

http://msdn.microsoft.com/en-us/library/ms186388(v=sql.105).aspx

http://stackoverflow.com/questions/8828557/possible-to-configure-database-autogrowth-settings-at-the-instance-level

Please could anyone point me to a Microsoft knowledge base article that documents whether this should actually work, or is it 'by design'?