According to OnDemand documentation, there should be a button "Add" to create additional versions for the project, just as I used to have in Download version. But there's no such button and I cannot neither create version from that screen, nor create hierarchy of version at all.
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November 8, 2011 edited
Can you check if your user account has the "Administer Projects" permission? (This permission is set in the project permission scheme, by default it points to the administrator project role. This does not automatically mean that all administrators have this project role) Without this permission the "Add" button will not show.
The misleading part was that it was a default setup and an admin user in combination with the fact, that I was able to add versions from Administration > Project > Versions
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