Comment 16 for bug 516040

>Fatal: Invalid configuration in /etc/dovecot/dovecot.conf [fail]
>Line 691 in dovecot.conf says: sieve=~/.dovecot.sieve

I experienced this same issue after a distro upgrade from 9.10 to 10.04 LTS. I found that this problem is being caused during upgrades from earlier versions by retaining the old dovecot.conf file during the upgrade. A number of config statements have been moved around in the dovecot.conf file for the new version included in 10.04 LTS causing the old dovecot.conf file to be incompatible. The solution is to use the latest version of the dovecot.conf file included with the distro during upgrade and then manually add your local configuration changes. Examples of the new format are included and loaded during the upgrade in the etc/dovecot directory for ucf-dist, db, dict-sql, sql, and ldap.

Cheers