Same for me. 
I installed Gutsy from the alternate install CD (last beta) and then the 
package manager downloaded the last version of all the installed packages 
(about 350 MB). After that I received a message saying there was a new system 
upgrade available. After running the first and the second step of the system 
updater It says that the system is up to date and cancels the process

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Kubuntu 7.10 Upgrading to Kubuntu 7.10 and after gives error and says 
Distribution is Up To Date
https://bugs.launchpad.net/bugs/154771
You received this bug notification because you are a member of Ubuntu
Bugs, which is the bug contact for Ubuntu.

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