I happened to have very old repository which I hadn't had touched for a
long time:
$ bzr init
bzr: ERROR: Unsupported branch format: Bazaar-NG branch, format 0.0.4
SUGGESTION
Make the error message read:
bzr: ERROR: Unsupported branch format: Bazaar-NG branch, format 0.0.4
bzr: See also command 'bzr upgrare'
Jari