Trying dhcp with the old syntax fails, and configuring a static ip appears to succeed, but then fails when I try to do something with the connection.
eth0="eth0 192.168.0.116 netmask 255.255.255.0 broadcast 192.168.0.255" INTERFACES=(eth0) gateway="default gw 192.168.0.1" ROUTES=(gateway)
What does "route" say in this case? I had a similar problem with the update which was due to the gateway being ignored. At that point I switched to netcfg which worked fine...