This bug was fixed in the package ifupdown - 0.6.8ubuntu29

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ifupdown (0.6.8ubuntu29) lucid; urgency=low

  * debian/postinst: if the loopback interface is missing from the config in
    /etc/network/interfaces, add it on upgrade; there is no valid use case
    for a system without localhost, and not bringing this up will cause
    upstart runlevel handling to fail.  LP: #497299.
 -- Steve Langasek <[email protected]>   Fri, 19 Feb 2010 20:29:32 -0800

** Changed in: ifupdown (Ubuntu Lucid)
       Status: Triaged => Fix Released

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