This is what I did to get it to work.

I am using pythonbrew(which is using pip) with python 2.7.5 installed.

I first did what Zubair(above) said and ran this command:

sudo apt-get install libsqlite3-dev

Then I ran this command:

pip install pysqlite

This fixed the database problem and I got confirmation of this when I ran:

python manager.py syncdb