I'd have though it was becuase the old version of syslog is still running - port 514 (0.0.0.0:514) is listed as the syslog port in /etc/services...
Use ps -ef | grep syslog to make sure it's not already running something on that port.
If not and you still get the error, check netstat -an | grep 514 to see if anything else is holding the port open.
If it does and you have lsof, then use lsof -i :514 to find the culprit
Glad to be of help.. Maybe you can help me now.
I posted a question and have had no responses regarding the syslog-ng.conf file. Have a look here and comment if you can.