I got the same error after trying to automatically upgrade from BuddyPress 1.0.1 to 1.0.3 through the plugin page.
It looks like I was still only running WP MU 2.7.1
Wouldn’t it be smart (in the automatic BuddyPress upgrade) to check to see if the WP MU version is compatible with the version of BuddyPress that is about to be installed before the automatic process is started? Just an idea