Overlapping instances error for Yesod and EclipseFP application

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I created an application with EclipseFP, the yesod application. With the out of the box settings, I get an error when I try to run a 'main.hs' file. It looks like it compiles but when I try to run I get the error. I attempted to run by 'right clicking' and then 'run'. The console opens:

What might be the issue?

    Here is the error:
    <command line>:
        Could not find module `OverlappingInstances':
          Use -v to see a list of the files searched for.
Failed, modules loaded: none.
Prelude> main

Version: Indigo Service Release 2
Eclipse FP Haskell Plugin - 2.2.4
GHC version 7.0.3

Possible solutions:

I tried to add '{-# LANGUAGE OverlappingInstances #-}' at the top of all of the haskell files

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This is a bug, I've fixed it in the github version of EclipseFP/BuildWrapper. Will be part of the 2.3.0 release of EclipseFP. We're getting the wrong options from the cabal file and pass OverlappingInstances to GHCi without the -X. Sorry!