Nearly Free Speech has been a great hosting service, and they upgrade the stack consistently, which usually doesn't cause problems. But with the most recent upgrade, I started getting the above error. Looks like they turned on compression at the server level, so doing it on each page is redundant.
Evidently they announced it on the blog, but I never keep up with that.
Changing all my ob_start('ob_gzhandler'); to ob_start(); fixes it. Hope this helps someone else.
