Of course. Remove resolvconf. That's the obvious - I knew I was missing something obvious. On my laptop, resolvconf facilitates bringing eth devices up and down in different networks, but that's not needed for a server. Somehow had it in my mind that resolvconf was needed to update resolv.conf.
I shall remove resolvconf. Still seems like there is a bug in there though - if it was my laptop, and by default I want eth0 to come up static, and I use resolvconf, and the DNS servers do not end up in resolv.conf on first bootup, I'd call it an error. Thanks for the feedback Zen -- SLUG - Sydney Linux User's Group Mailing List - http://slug.org.au/ Subscription info and FAQs: http://slug.org.au/faq/mailinglists.html
