Lycid Lynx’ repository by default set to install Mercurial 1.4.x, which is great, but as of today that’s already 3 major releases behind 
To get yourself on the latest and greatest version of Mercurial there are 2 options: build from the source or just add mercurial-releases repository like this:
sudo add-apt-repository ppa:mercurial-ppa/releases
sudo apt-get update
sudo apt-get install mercurial
Make sure it did the right thing:
$ hg --version
Mercurial Distributed SCM (version 1.6)
Copyright (C) 2005-2010 Matt Mackall and others
This is free software; see the source for copying conditions. There is NO
warranty; not even for MERCHANTABILITY or FITNESS FOR A PARTICULAR PURPOSE.
Another thing that will go nicely with Mercurial 1.6.x or 1.7.x is up-to-date TortoiseHg. To install TortoiseHg on Ubuntu 10.04 you’ll need to run the following:
sudo add-apt-repository ppa:tortoisehg-ppa/releases
sudo apt-get update
sudo apt-get install tortoisehg-nautilus