Same issue. I just installed v1.2.3 (on a Mac OS 10.7.5) and followed the instructions. Running `VAGRANT_LOG=debug vagrant up` I got:
(snip plugin info)
INFO manager: Registered plugin: shell
INFO vagrant: `vagrant` invoked: ["up"]
DEBUG vagrant: Creating Vagrant environment
INFO environment: Environment initialized (#<Vagrant::Environment:0x00000100b7e818>)
INFO environment: - cwd: /Users/aobrien/Play/vagrant
INFO environment: Home path: /Users/aobrien/.vagrant.d
INFO environment: Local data path: /Users/aobrien/Play/vagrant/.vagrant
DEBUG environment: Creating: /Users/aobrien/Play/vagrant/.vagrant
DEBUG environment: Loading plugins from: /Users/aobrien/.vagrant.d/plugins.json
INFO environment: Running hook: environment_load
INFO environment: Initializing config...
INFO loader: Set :default = "/Applications/Vagrant/embedded/gems/gems/vagrant-1.2.3/config/default.rb"
DEBUG loader: Populating proc cache for "/Applications/Vagrant/embedded/gems/gems/vagrant-1.2.3/config/default.rb"
DEBUG loader: Load procs for pathname: /Applications/Vagrant/embedded/gems/gems/vagrant-1.2.3/config/default.rb
INFO loader: Set :root = #<Pathname:/Users/aobrien/Play/vagrant/Vagrantfile>
DEBUG loader: Populating proc cache for #<Pathname:/Users/aobrien/Play/vagrant/Vagrantfile>
DEBUG loader: Load procs for pathname: /Users/aobrien/Play/vagrant/Vagrantfile
INFO loader: Loading configuration in order: [:default, :home, :root]
DEBUG loader: Loading from: default (evaluating)
DEBUG loader: Loading from: root (evaluating)
DEBUG loader: Configuration loaded successfully, finalizing and returning
DEBUG hosts: Host path search classes: [VagrantPlugins::HostWindows::Host, VagrantPlugins::HostOpenSUSE::Host, VagrantPlugins::HostArch::Host, VagrantPlugins::HostFedora::Host, VagrantPlugins::HostFreeBSD::Host, VagrantPlugins::HostGentoo::Host, VagrantPlugins::HostLinux::Host, VagrantPlugins::HostBSD::Host]
INFO hosts: Host class: VagrantPlugins::HostBSD::Host
INFO runner: Running action: #<Vagrant::Action::Builder:0x00000100c01ec0>
INFO cli: CLI: [] "up" []
DEBUG cli: Invoking command class: VagrantPlugins::CommandUp::Command []
DEBUG command: 'Up' each target VM...
DEBUG command: Getting target VMs for command. Arguments:
DEBUG command: -- names: []
DEBUG command: -- options: {:provider=>nil}
DEBUG command: Loading all machines...
INFO environment: Getting machine: default (virtualbox)
INFO environment: Uncached load of machine.
INFO loader: Set :vm_default = []
INFO loader: Loading configuration in order: [:default, :home, :root, :vm_default]
DEBUG loader: Loading from: default (cache)
DEBUG loader: Loading from: root (cache)
DEBUG loader: Configuration loaded successfully, finalizing and returning
INFO environment: Provider-supported box formats: [:virtualbox]
INFO box_collection: Searching for box: precise32 (virtualbox) in /Users/aobrien/.vagrant.d/boxes/precise32/virtualbox/metadata.json
INFO box_collection: Box found: precise32 (virtualbox)
INFO environment: Box found with format: virtualbox
INFO environment: Box exists with Vagrantfile. Reloading machine config.
INFO loader: Set :box_precise32_virtualbox = #<Pathname:/Users/aobrien/.vagrant.d/boxes/precise32/virtualbox/Vagrantfile>
DEBUG loader: Populating proc cache for #<Pathname:/Users/aobrien/.vagrant.d/boxes/precise32/virtualbox/Vagrantfile>
DEBUG loader: Load procs for pathname: /Users/aobrien/.vagrant.d/boxes/precise32/virtualbox/Vagrantfile
INFO loader: Loading configuration in order: [:default, :box_precise32_virtualbox, :home, :root, :vm_default]
DEBUG loader: Loading from: default (cache)
DEBUG loader: Loading from: box_precise32_virtualbox (evaluating)
DEBUG loader: Upgrading config from version 1 to 2
DEBUG loader: Upgrading config to version 2
DEBUG loader: Upgraded to version 2 with 0 warnings and 0 errors
DEBUG loader: Loading from: root (cache)
DEBUG loader: Configuration loaded successfully, finalizing and returning
INFO machine: Initializing machine: default
INFO machine: - Provider: VagrantPlugins::ProviderVirtualBox::Provider
INFO machine: - Box: #<Vagrant::Box:0x00000100d70310>
INFO machine: - Data dir: /Users/aobrien/Play/vagrant/.vagrant/machines/default/virtualbox
DEBUG virtualbox: Instantiating the driver for machine ID: nil
INFO base: VBoxManage path: VBoxManage
INFO environment: Running hook: environment_unload
INFO runner: Running action: #<Vagrant::Action::Builder:0x00000100b108e0>
ERROR vagrant: Vagrant experienced an error! Details:
ERROR vagrant: #<Vagrant::Errors::CommandUnavailable: The executable '%(file)' Vagrant is trying to run was not