I'm usually pretty good at searching and finding answers but I couldn't come up with anything on this one. My Scala interpreter works fine except if I want to repeat a command. When I use the up-arrow key, I get an escape character. My operating system is Ubuntu 9.04 and I usually use bash for my terminal but I've also tried this with xterm and get the same results.
The problem was, I was a good little soldier and installed Scala via apt-get. However, as of the date of this post, the current version in the Ubuntu/Debian repositories isn't the most recent stable release. It's 2.7.3 and the latest version from the Scala site is 2.7.6. I uninstalled Scala and downloaded the latest tarball from Scala and installed it. Interpreter works as expected now.
Make sure you link or set the path for 'scala' and 'scalac'