I reported this issue, and I failed to mention that I am running on MacOS. It turns out that the default VM args specified in the debug configuration pane were not quoted, and I have a space in my eclipse path. So I simply put double quotes around the args and I got past this exception. Here is what I have now:
-Dgroovy.starter.conf="/Applications/eclipse 3.5.1/plugins/org.codehaus.groovy_1.7.0.xx-20091028-2000-e35/conf/groovy-starter.conf" -Dgroovy.home="/Applications/eclipse 3.5.1/plugins/org.codehaus.groovy_1.7.0.xx-20091028-2000-e35"