Attempts to change the settings fro a group results in erroneous message

Hi,
This post is related to: http://forum.civicrm.org/index.php/topic,14230.msg60763.html#msg60763.

Since it is a fairly critical issue, important, I took the liberty of filing the issue for "CatorgHans".

when trying to change the settings of a group you'll get: No Groups have been created for this site.

This happens on our internal sites as well as http://sandbox.civicrm.org/civicrm/group?reset=1&action=update&id=3.

Works fine in 3.1.3

Thanks,
Cynthia