Ok I have solved the problem and its not a bug. I just removed the DVD-
ROM of Ubuntu 8.10 from software source
(System->Administartion->Software sources). And also added all the
online repositories. Now the problem doesnot exist, though I didn't try
to update.

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A unresolvable problem occurred while initializing the package information. 
https://bugs.launchpad.net/bugs/306515
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