I have the same error and pretty much the exact same setup
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https://bugs.launchpad.net/bugs/806176
Title:
/usr/lib/pymodules/python2.6/nova/network/manager.py, line 558,
@Diego Lalo, the syntax for the command has changed
It is now
nova-manage network create your_network_name 192.168.3.0/24 1 128
I have updated the openstack wiki page accordingly
http://wiki.openstack.org/RunningNova
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