At some point I believe bazaar switched from the 'bzr ls' command behavior from defaulting to recursively display relevant to requiring the command line option --recursive. I'd wager this was a bazaar 1.0 to 2.0 change, though I haven't really looked into it. I've attached a patch that updates _bzr (I believe correctly formatted, it's been a while), though this will break completion with older versions of bazaar. Not sure if that's important, as it's probably very unlikely anyone will be using bleeding edge versions of zsh and ancient versions of bazaar - and anyone is, they'll probably Get What They Deserve.
Seen the issue on zsh 4.3.11 on a OS X 10.7 and Ubuntu 11.10, though I'm quite certain I've been seeing this (and been apply the patch's changes) for several different Ubuntu releases, a few different zsh releases, and a few different bzr releases. Note, that the patch is technically untested against the latest Zsh release, but I'm using it right now with zsh 4.3.11 and bzr 2.4.1.