I get the same error when I attempt to import KMZ that was generated from ArcGIS into Sketchup 8.
As far as I am concerned, it is currently NOT POSSIBLE to import data other then Multipatch using ArcGIS 10 into Sketchup version 7 and 8. I started a thread about this issue both here and on StackExchange with no results. The only way is to export to DXF then import to sketchup but data will not be referenced so some of of geo-referencing method is required to scale the DXF. Also as far as i know only COLLADA can be brought back into ArcGIS georeferenced, not vector features. The entire Sketchup Model can be imported so long it is saved as SketchUp 6 version, unfortunatelly it will not be geo-referenced.
However, i am able to import multipatch features generated with 3D Analyst into Sketchup, but so far i have only tried converting TIN to multipatch and importing into sketch-up.