At this point, Zynga has not addressed this issue or problem and I'm sure because of the multiple complaints they will figure out a solution to this error.
However, FarmVille Freak Chris Salvador has a useful tip that may work for you and get you that free level up that every FarmVille Freak deserves. It's worth trying at this point when there is no other alternative (yet). Says Chris,
"If you're having problems, (re)purchase the New Years Ball (if you don't have it already) and place it in your storage (barn or shed) then bring it back out. This will make it pop back up and then press accept to finally get your level up bonus. (Do this at your own risk, I found out this method and it worked for me)
Good Luck, Happy Farming and Happy New Years!"
If you would personally like to contact Zynga Support and file a claim you may do so here: http://zynga.custhelp.com/app/answers/detail/a_id/783/kw/free%20level%20up/p/402/r_id/101691
Did FarmVille Freak Chris' tip work for you?
This article reprinted with permission from FarmVille Freak.