Bug still exists in natty beta 2. Error message is now:

No init found. Try passing init= bootarg.

BusyBox v1.17.1 (Ubuntu 1:1.17.1-10ubuntu1) built-in shell (ash)
Enter 'help' for a list of built-in commands.

(initramfs)

** Changed in: linux (Ubuntu)
       Status: Expired => Incomplete

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https://bugs.launchpad.net/bugs/685159

Title:
  Storage expansion card prevents live USB from booting on Acer Aspire
  One

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