Working on a SharePoint where I was reshuffling some files, suddenly I run into this error while attempting to add a solution to the solution store: Failed to extract the cab file in the solution.
For me the solution was very simple. One of the files had dubble dot before the extension in the file name. Removing the dot solved the problem. It seems that not only double dots, but also parentheses can cause the same error. This is documented on MSDN.