The update from Rake Runner installs Puppet 4.0 (via gems). Puppet 4.0 requires Ruby 1.9.3. So on Ubuntu 12.04, Puppet 4.0 does not work. This also breaks the puppet agent running as a system service (installed through the package management) as the gem version of puppet overrides the package version.
Rake Runner breaks puppet for both the system and the teamcity agent use.