I am having the same problem using apt-cacher-ng, when trying to upgrade
to Ubuntu 8.10 I get the following:

magic...@andrea:~$ sudo do-release-upgrade
Checking for a new ubuntu release
Failed Upgrade tool signature
Done Upgrade tool
Done downloading            
extracting 'intrepid.tar.gz'
authenticate 'intrepid.tar.gz' against 'intrepid.tar.gz.gpg' 
exception from gpg: GnuPG exited non-zero, with code 131072
Debug information: 

gpg: WARNING: unsafe permissions on homedir `/tmp/tmp-AFwaU'

gpg: can't open `/tmp/tmp-AFwaU/intrepid.tar.gz.gpg'
gpg: verify signatures failed: file open error

Authentication failed
Authenticating the upgrade failed. There may be a problem with the network or 
with the server. 
magic...@andrea:~$

-- 
apt /usr/lib/apt/methods/http has proxy issues
https://bugs.launchpad.net/bugs/230832
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