Trap, ERR, and echoing the error line

As pointed out in comments, your quoting is wrong. You need single quotes to prevent $LINENO from being expanded when the trap line is first parsed.

This works:

#! /bin/bash

err_report() {
    echo "Error on line $1"
}

trap 'err_report $LINENO' ERR

echo hello | grep foo  # This is line number 9

Running it:

 $ ./test.sh
 Error on line 9

You can also use the bash builtin 'caller':

#!/bin/bash

err_report() {
  echo "errexit on line $(caller)" >&2
}

trap err_report ERR

echo hello | grep foo

it prints filename too:

$ ./test.sh
errexit on line 9 ./test.sh

I really like the answer given by @Mat above. Building on this, I wrote a little helper which gives a bit more context for the error:

We can inspect the script for the line which caused the failure:

err() {
    echo "Error occurred:"
    awk 'NR>L-4 && NR<L+4 { printf "%-5d%3s%s\n",NR,(NR==L?">>>":""),$0 }' L=$1 $0
}
trap 'err $LINENO' ERR

Here it is in a small test script:

#!/bin/bash

set -e

err() {
    echo "Error occurred:"
    awk 'NR>L-4 && NR<L+4 { printf "%-5d%3s%s\n",NR,(NR==L?">>>":""),$0 }' L=$1 $0
}
trap 'err $LINENO' ERR

echo one
echo two
echo three
echo four
false
echo five
echo six
echo seven
echo eight

When we run it we get:

$ /tmp/test.sh
one
two
three
four
Error occurred:
12      echo two
13      echo three
14      echo four
15   >>>false
16      echo five
17      echo six
18      echo seven