This happened to me at second playthrough, and the reason for it was rather strange:
It seems that if you kill the wraiths outside the manor before you go in to look for Letho, that is if you finish the quest before entering the manor, Letho will not appear. Now on my third playthrough and took care to not kill anything before going inside the manor walls, and sure enough Letho was there this time. So it's not a bug per say, although I'm not sure if this is intended or not.
I have not tested this first-hand but I found a web page that stated all of the various dialogue choices there are in the game and all of the different changes to the story and end-game results you obtain based on the choices you make, as well as the way Witcher 2 save games affect the game. I do not have the link handy (didn't bookmark it) but there are allegedly 2 ways for Letho to appear in the game.
1) By importing a Witcher 2 save game in which Letho lives, and you are actually importing the *correct* save game from the end of the game.
2) By choosing the Witcher 2 save game simulation mode, and then when you're in Vizima palace getting a shave, answering the questions you're asked properly as that determines the Witcher 2 simulated save game state which will determine whether Letho shows up as an option later on among other things.
I did not get to see Letho because I did not load a savegame nor choose the simulate option. As far as I'm aware from what I read online, there is no bug regarding Letho - he only shows up if you meet the specific conditions for him to be alive and present based on your choices either in The Witcher 2 and using a correct save game file, or in the simulation dialogue choices.
If anyone else knows of another way I'm sure they'll share it as well though.