Manually specifying /usr/bin/deluge-gtk worked but I shouldn't have had to do it.
You should make sure this gets fixed so it doesn't happen again.

Tray behaviour has been changed for no reason whatsoever, what used to be one click to show, one click to hide, is now a two-step process. Tray icon also now does not respond to right click, just the left click, which pops up the selection menu instead of previous behaviour of Hide/Restore to tray....

To clarify, torrent is selected in FireFox, it brings up the typical dialog of whether to save or open, I select to open in Deluge.
Deluge then opens an empty add torrent dialog and produces that error.

If I save torrent to disk first, then add it, it works fine.

Tray behaviour has been changed for no reason whatsoever, what used to be one click to show, one click to hide, is now a two-step process. Tray icon also now does not respond to right click, just the left click, which pops up the selection menu instead of previous behaviour of Hide/Restore to tray. ...

I hate the new interface changes and it's not auto-adding my torrents.
How do I revert to an older version like 1.3.0, which worked fine?
I'm running Ubuntu Studio x64, 10.04 LTS - Lucid Lynx