Error during Hardy install

Can you please tell us precisely what command you used?

Additionally, was there any problem during the configuration (you should have been asked some questions, like username and password)?

The command used was:
sudo apt-get install noip2

I did a complete removal and then tried reinstalling the pacakge. I did get a blue-coloured screen where I entered my username, password etc. after which this error message came up.

noip was working perfectly in Gusty and the error first appeared while upgrading to Hardy. I haven't been able to get it to work ever since. Can somebody confirm that this package doesn't install on Hardy?

Rather the contrary, the package installs and/or upgrades for most users. We have a couple of cases reported where it fails the configuration step but nobody has yet provided any information that could allows us to debug it.
What happens if you give the following command:

noip2 -C -u username -p password -U updating -L hosts_groups -I interface

Where:

username is your username
password is your password
updating is the update interval (in minutes)
interface is your network interface (eg. eth0)
hosts_groups is the comma-separated hosts/groups list
(eg. some_domain.no-ip.com,Group1,Group2,another_domain.no-ip.biz)

And if you give this one:

sudo /etc/init.d/noip2 start

What is the content of your /var/lib/noip2/noip2.conf file?
(if you feel that there is confidential data in noip2.conf please mask it with some x).

I've tried installing noip2 on a fresh Hardy install and can confirm the following bugs:
Installation fails when -
1. The password contains a space.
2. The username and/or password is incorrect.(eg. Try entering some username and leave all other fields at their defaults which includes a blank password and hostname)

The post install configure script in the deb package which calls noip2 with the username, password, etc. on the command line doesn't handle spaces (and probably other special characters) correctly causing noip2 to fail.
Running dpkg-reconfigure after installation does not help either because apt-get detects a failed installation.
(/usr/sbin/dkpg-reconfigure: noip2 is broken or not fully installed)
Also, whenever apt-get is used to install/uninstall anything, it attempts to re-run the noip2 postinstall script and reports an error.

I've solved my problem by changing my password so that it didn't contain a space.

Thanks for the additional info. I'm confirming this bug and have informed upstream about this problem. You may add your comment or opinion in their bug tracker (see link above).

Sync requested in bug 234634

 no-ip (2.1.7-9) unstable; urgency=low
 .
   [ Andres Mejia ]
   * Remove use of --error-handler for dh_installinit.
 .
 no-ip (2.1.7-8) unstable; urgency=low
 .
   [ Andres Mejia ]
   * Fix where logcheck filter is installed. Closes: #478848
   * Add DM-Upload-Allowed: yes field in control file.
   * Fixing postinst to allow usernames and passwords with spaces.
     Closes: #480543
   * Added nostrip option for DEB_BUILD_OPTIONS.
   * Fix manpage lintian warning.