sudo rootstock -d lucid --fqdn arm --login user --password pass --imagesize 1G --seed build-essential,openssh-server,ubuntu-minimal,nano --notarball
adding init was essential:
qemu-system-arm -M versatilepb -cpu cortex-a8 -kernel ./vmlinuz -hda qemu-armel-201104120842.img -m 256 -append "root=/dev/sda mem=256M devtmpfs.mount=0 rw init=/sbin/init"
then enable networking
sudoedit /etc/network/interfaces
add auto eth0
iface eth0 inet dhcp
