I don't know about that error but just make sure you are using the latest source from github, not code.google.com, the project just recently moved and the source has changed.
I can confirm that after cloning the flam3 and electric sheep git repositories and following the Linux build instructions, I have successfully compiled and can run electric sheep.
There was some issue with autogen and flam3 where the autoconf version didn't match. I googled through it and a review of my history shows I use the commands (maybe not all successfully or to effect)