I don't know the extent this would help you guys, but ...

Short version:  I (and others, but not everyone) found that to make this
work best, and specifically to ensure persistence, it helps to use ext3
for the casper-rw partition (and I have used ext3 for both partitions
this time with 8.04: the root partition  kubuntu804 and casper-rw).  (I
first got the tip from K0LO @ Kubuntu forums.)

Here's the notes on that, as well as other workarounds:
https://bugs.launchpad.net/ubuntu/+source/upstart/+bug/125702

(do this, in addition to fixing the bug we are talking about here with
BusyBox)

-- 
[hardy] livecd: keyword "persistent" results in busybox and (initramfs)
https://bugs.launchpad.net/bugs/219192
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