There are two places which can affect this error. I caused this problem for myself, by a typographical error when changing the defaults for screenshot from png to jpg, (I type jpb, which it didn't know). Check this with the following command:
defaults read com.apple.screencapture
It should either be empty, or have one or more variable assignments. Mine has location and type. The type line is the one which caused my problem. First step is to delete it, with the defaults command as follows:
defaults delete com.apple.screencapture type
Next, restart the process SystemUIServer with the following command:
killall SystemUIServer
Wait a minute or two for it to kill the process, and then spawn a new one. Then try your screen capture again.
If you still get the error, there could be a permissions problem or error in the file "/System/Library/CoreServices/SystemUIServer.app/Contents/Resources/English.lpr oj/Localizable.strings". There is a great article on changing this file at:
http://www.macosxhints.com/article.php?story=20091228142521881
Remember that killall command above to restart the SystemUIServer after you make changes to this file as well.