While editing or creating geometric network features stored in Z-aware feature classes, the following error is returned:
"Geometry cannot have z values"
A bug in ArcGIS 10 is exposed when editing geometric network features in Z-aware feature classes when the geometric network has been created with the option to "Use Z values to determine connectivity of features".
While using ArcGIS Desktop 10.0 or ArcGIS Desktop 10.0, Service Pack 1, work around this bug by ensuring the the 'Coordinates include Z values' checkbox in the Create Feature Class wizard is unchecked. This recreates the feature classes participating in the geometric network as non-Z aware feature classes.
This issue has been fixed in 10.0 SP2.