I'm running Ubuntu 12.04 beta ("Precise"), and stumbled into this bug:
when a new version of the bytestring library was added to Hackage. Any cabal operation fails with
Reading available packages...
cabal: Couldn't read cabal file "bytestring/
The workaround from the link above, works:
tar -f ~/.cabal/
Although hopefully, we'll avoid packages that trigger this bug in the future, it would be better if Ubuntu would upgrade the cabal version to a newer one that doesn't display this behavior.