For me in edgy, this is caused by an old installation of istanbul, where
the .pyc and .pyo files was not removed correctly.  The .py files was
gone...

I did the following
sudo apt-get remove --purge istanbul

found that I still had files under /usr/lib/python2.4/site-packages/istanbul/ 
with extensions .pyc and .pyo.
sudo rm -rf /usr/lib/python2.4/site-packages/istanbul/

sudo apt-get install istanbul

Now it works... (well, at least starts, haven't tried it yet)

/Erik

-- 
Import Error: No module named ltihooks
https://launchpad.net/bugs/68321

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