Maybe you haven't seen this error before, but if you have, this was when trying to create a work item. 

There are 2 solutions.  I prefer the second one.

Solution 1:
This solution can be found at the connect site of Microsoft and is a temporary workaround.  You can read all of it here: http://connect.microsoft.com/VisualStudio/feedback/ViewFeedback.aspx?FeedbackID=356083

Solution 2:
In my opinion this is the best (and easiest) solution.  Mostly you got this error because you have installed Team Explorer after installing VS2008 SP1.  So what you can do is re-installing VS2008 SP1 and the problem should be resolved.

If you do a clean install, be sure to follow this order of installation to avoid problems:

1. Visual Studio 2008
2. Team Explorer
3. Visual Studio 2008 SP1

On some sites you will see that before installing SP1, you also need to install the TFS 2008 October Power tools, but I didn't encounter any problem when I install them after installing SP1.  If you want to be sure then install the power tools before SP1.