Fails here also. I downgraded upstart to to 0.6.3-10, works again now.
Using Karmic 32bits/PAE

my /etc/network/interfaces (which looks me correct) below:
-------
auto lo
iface lo inet loopback

iface eth0
 pre-up /usr/sbin/ethtool -s eth0 advertise 0x02b
-------

-- 
upstart not starting init-scripts (event net-device-up IFACE=lo missing)
https://bugs.launchpad.net/bugs/497299
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