As a follow up... The same error seems to occur on InsertItemTemplate on listview.
Here is what I attempted:
<InsertItemTemplate>
      <tr>
              <td>
                   Rag Status
                  <asp:DropDownList ID="ddlRagStatusIdInsert" runat="server" DataSourceID="dsRagStatus"
                 SelectedValue='<%# Bind("RagStatusId") %>'
                    DataTextField="DescrShort" DataValueField="RagStatusId" AppendDataBoundItems="true">
                    <asp:ListItem Text="-Select-" Value="" Enabled="True"></asp:ListItem>
                  </asp:DropDownList>
</td></tr> etc...
I have got around this with:
 Private Sub lvIssue_ItemInserting(ByVal sender As Object, ByVal e As System.Web.UI.WebControls.ListViewInsertEventArgs) Handles lvIssue.ItemInserting
    e.Values("LastUpdate") = Now.ToString
    e.Values("LastUpdateBy") = HttpContext.Current.User.Identity.Name
    ' Grab selected value rather than binding with  SelectedValue='<%# Bind("RagStatusId") %>'
    e.Values("RagStatusId") = CType(CType(sender, ListView).InsertItem.FindControl("ddlRagStatusIdInsert"), DropDownList).SelectedValue
  End Sub
Hope this helps someone!