Well, it could probably handle the error more gracefully -- but it
would fail anyway.
Sigh. That's yet another case where Atmel has silently modified
parameters in their XML files. Between AVR Studio build 452 (the XML
files our initial STK500v2 implementation has been based on), and
build 460 (final AVR Studio 4.12), the delay values for flash and
EEPROM of the ATmega8 have been bumped.
Please change the delay value in the ATmega8 section of your
avrdude.conf from 6 to 10 for the "flash" memory, and from 10 to 20
for the "eeprom" memory area.