I've figured out the problem: it seems it was caused by a strange MAC
address of my second network interface. When I ran 'ifconfig -a' it
showed me HWaddress of eth1 was 00:00:00:00:00:00. I set it to something
different from 00:00:00:00:00:00 in my interfaces file as follows:
iface eth1 inet static
address 10.0.0.10
netmask 255.255.255.0
hwaddress ether 00:17:31:94:0d:d5
And eth1 is up again! It's curious why it used to work with an older
kernel since the MAC address of eth1 was that same 00:00:00:00:00:00.
And though eth1 works now, I still get a single 'SIOCSIFFLAGS: Invalid
argument' message when I run ifup eth1.
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No network connection possible after Hardy installation or upgrade
https://bugs.launchpad.net/bugs/191745
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