This just happened to me as well:

  ~/source/ami> bzr co /db/repo/ami/galileo/
  ~/source/ami> cd galileo
  ~/source/ami/galileo> bzr branch /db/repo/ami/trunk/ trunk/
  Branched 1410 revision(s).
  ~/source/ami/galileo> bzr stat
  unknown:
    trunk/
  ~/source/ami/galileo> bzr join trunk/
  renamed file:///data/home/julian/source/ami/galileo/trunk/.bzr to .bzr.retired.0
  ~/source/ami/galileo> rm -rf trunk/.bzr.retired.0/
  ~/source/ami/galileo> bzr stat
  working tree is out of date, run 'bzr update'
  renamed:
    / => trunk/
  ~/source/ami/galileo> bzr up
  bzr: ERROR: exceptions.ValueError: WorkingTree.set_root_id with fileid=None

  Traceback (most recent call last):
    File "/usr/local/lib/python2.6/site-packages/bzrlib/commands.py", line 912, in exception_to_return_code
      return the_callable(*args, **kwargs)
    File "/usr/local/lib/python2.6/site-packages/bzrlib/commands.py", line 1112, in run_bzr
      ret = run(*run_argv)
    File "/usr/local/lib/python2.6/site-packages/bzrlib/commands.py", line 690, in run_argv_aliases
      return self.run(**all_cmd_args)
    File "/usr/local/lib/python2.6/site-packages/bzrlib/commands.py", line 705, in run
      return self._operation.run_simple(*args, **kwargs)
    File "/usr/local/lib/python2.6/site-packages/bzrlib/cleanup.py", line 135, in run_simple
      self.cleanups, self.func, *args, **kwargs)
    File "/usr/local/lib/python2.6/site-packages/bzrlib/cleanup.py", line 165, in _do_with_cleanups
      result = func(*args, **kwargs)
    File "/usr/local/lib/python2.6/site-packages/bzrlib/builtins.py", line 1440, in run
      old_tip=old_tip)
    File "/usr/local/lib/python2.6/site-packages/bzrlib/workingtree.py", line 2262, in update
      return self._update_tree(old_tip, change_reporter, revision)
    File "/usr/local/lib/python2.6/site-packages/bzrlib/mutabletree.py", line 50, in tree_write_locked
      return unbound(self, *args, **kwargs)
    File "/usr/local/lib/python2.6/site-packages/bzrlib/workingtree.py", line 2317, in _update_tree
      self.set_root_id(to_root_id)
    File "/usr/local/lib/python2.6/site-packages/bzrlib/mutabletree.py", line 50, in tree_write_locked
      return unbound(self, *args, **kwargs)
    File "/usr/local/lib/python2.6/site-packages/bzrlib/workingtree.py", line 2175, in set_root_id
      'WorkingTree.set_root_id with fileid=None')
  ValueError: WorkingTree.set_root_id with fileid=None

  bzr 2.2.1 on python 2.6.6 (FreeBSD-6.3-STABLE-amd64-64bit-ELF)
  arguments: ['/usr/local/bin/bzr', 'up']
  encoding: 'UTF-8', fsenc: 'UTF-8', lang: 'en_US.UTF-8'
  plugins:
    bash_completion      /usr/local/lib/python2.6/site-packages/bzrlib/plugins/bash_completion [2.2.1]
    launchpad            /usr/local/lib/python2.6/site-packages/bzrlib/plugins/launchpad [2.2.1]
    netrc_credential_store /usr/local/lib/python2.6/site-packages/bzrlib/plugins/netrc_credential_store [2.2.1]
    news_merge           /usr/local/lib/python2.6/site-packages/bzrlib/plugins/news_merge [2.2.1]

  *** Bazaar has encountered an internal error.  This probably indicates a
      bug in Bazaar.  You can help us fix it by filing a bug report at
          https://bugs.launchpad.net/bzr/+filebug
      including this traceback and a description of the problem.