I have the same problem as well, running feisty latest updates,

init:             init (upstart 0.3.8)
kernel:        2.6.18-ovz-028stab045.1 (OPENVZ kernel)

if I put the following line
"net.ipv4.conf.all.forwarding=1"
in the "/etc/sysctl.conf" file and run "sysctl -p", forwarding is enabled

regards, Eelko van Breda

-- 
sysctl.conf, net.ipv4.conf.default.forwarding, race condition?
https://bugs.launchpad.net/bugs/84537
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