From the command line, as root, run "apt-get update" and see what that produces (should do the same thing as the app manager, but might give you more output). Then you'll need to check that gzip works (you've not broken the symlink to it for example), that files you download are not zero-sized or corrupted, etc.

You might also want to look at the source for app manager and gzip and work out what that error code means.