This issue is fixed in Hardy Heron.  Thanks.

 grep E1000 /boot/config-2.6.24-12-generic 
CONFIG_E1000=m
CONFIG_E1000E=m
# CONFIG_E1000_DISABLE_PACKET_SPLIT is not set
CONFIG_E1000_NAPI=y

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NAPI Disabled for net drivers, bug?
https://bugs.launchpad.net/bugs/74563
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