The problem ended being the use of "Perform Bias Correction"(-b) and a GTF file with no "Database/Build" associated. Looking at cuffdiff wrapper I found, if a FASTA reference is not selected from the history, the FASTA reference of the GTF file associated build is used. If there is not build association, your cuffdiff run will fail with this not so helpful error.
My feeling is, cuffdiff should check for a non-dashed string after '-b' and complain if is absents, but this doesn't happen currently.
Agreed. I implemented the spirit of this functionality via argument checking in galaxy-central changeset 71031bf3105c