Using a fresh burrito, homebrew installs of python3.2 and python2.7 on Lion
When trying to generate a py32 container burrito is defaulting to the the distribute-0.6.24-2.7.egg and fails when pip installs.
The fix is simple, just delete it and try again
$ rm -Rf ~/.venvburrito/lib/python/distribute-0.6.24-py2.7.egg
$ mkvirtualenv -p $(which python3.2) --distribute py32
Confirmed issue also occurs on Ubuntu 10.10. Thanks for the quick fix commands!