For me, adding a param such as ip=dhcp or (in my case) ip=192.168.1.60 works fine. I havent' done anything bizarre to the kernel (have only changed the lcd driver) so I can't imagine I've made anything better.

what about from lolo (i.e. the ifconfig param there)?

Let me give a little more info...

We have the root fs on a compact flash and vmlinux burned into flash. We start the system from lolo using the following command:

exec 0x40100000 - ip=192.168.0.51 root=/dev/hda2

Linux starts up perfectly - . We even get the link light up. When we ping it from the host we see activity on the target - the act light is blinking. When we kill ping from the host the activity stops. The host is running tcpdump and I can see the ping requests going out, but nothing coming back. Hence our problem...

Any ideas?

I assume you are passed this issue now, but this sort of thing can happen when you just assign an ipaddress statically to some node on a dhcp network. If your network has a dhcp server, try just typing:
/sbin/dhcpcd eth0

and then
ip addr show

If it dumps an ip address you're all set, and the device will respond to pings at the new address.