My small business needs a groupware application that lets us 
 1) organize the projects we are working on (doesn't need GANT charts
but those would be nice)
 2) have discussions tied those projects
 3) post bugs/issues related to those projects

optional but nice:
 4) Reference files on windows shares in those discussions/projects.
 5) Versioning management/revision control for documents stored on server

It needs to be easy for non-geeks to use and it needs to be browser based.

For example, phpProjekt is way too hard to use. It also doesn't let
one hold discussions on projects. While it does have a forum, the
forum topics aren't connected with projects in any way. Most of the
groupware things I find online are for realtime conferencing and
application sharing which we don't need. We just need solid project
management and message based discussion that is easy to use. Anybody
know who's selling something like this?

The "Sponsored Links" gave www.opmcreator.com, which seems to have all
you're asking for and more. (Except they store the files, not
locally).

I'm not sure about file revision history, though.

It seems to me that http://www.dotproject.net will fulfull your
requirements 1, 2 and 3.

It will fulfull optional requirement 4, with the exception that it
stores the files in its own SQL database. It fulfills optional
requirement 5.

And it is GPL as well, so your expense on implementing the system
might scale from low to none.

www.opmcreator.com - OPMcreator will do what you are asking for, we
use this system for collaboration both internally and externally with
our customers, its easy top set-up and easy to use.  The revision
history is controlled by the system "date stamping" the uploaded file,
simple but it works.  You can have an unlimited number of projects at
any one time with full control over user access.  They also offer a
free trial for 30 days.

We host software projects at http://www.Projxpert.com/ but the
software is quite flexible. It allows your team to communicate and
collaborate around a project, no matter where they are.

You get:
 o) your own version control repository which is like having a shared
hard drive which remembers every change to every file.
 o) an issue tracker  
 o) discussion forums

The software is aimed at software developers but depending on your
requirements it could provide what your after.

s.