FLAT network injection failed

When I have in nova.conf

--flat_network_bridge=br0
--flat_injected=1

I cannot run the ubuntu-10.10 UEC image. The nova-compute.log shows
...

2011-04-30 22:39:26,305 DEBUG nova.utils [-] Running cmd (subprocess): qemu-img create -f qcow2 -o cluster_size=2M,backing_file=/var/lib/nova/instances/_base/local_20 /var/lib/nova/instances/instance-00000057/disk.local from (pid=7689) execute /usr/lib/python2.6/site-packages/nova/utils.py:150
2011-04-30 22:39:26,394 ERROR nova.exception [-] Uncaught exception
(nova.exception): TRACE: Traceback (most recent call last):
(nova.exception): TRACE: File "/usr/lib/python2.6/site-packages/nova/exception.py", line 120, in _wrap
(nova.exception): TRACE: return f(*args, **kw)
(nova.exception): TRACE: File "/usr/lib/python2.6/site-packages/nova/virt/libvirt_conn.py", line 616, in spawn
(nova.exception): TRACE: self._create_image(instance, xml, network_info)
(nova.exception): TRACE: File "/usr/lib/python2.6/site-packages/nova/virt/libvirt_conn.py", line 918, in _create_image
(nova.exception): TRACE: net = str(Template(ifc_template,searchList=[net_info]))
(nova.exception): TRACE: File "/usr/lib64/python2.6/site-packages/Cheetah/Template.py", line 1003, in __str__
(nova.exception): TRACE: rc = getattr(self, mainMethName)()
(nova.exception): TRACE: File "cheetah_DynamicallyCompiledCheetahTemplate_1304224766_39_13269.py", line 90, in respond
(nova.exception): TRACE: NotFound: cannot find 'interfaces'
(nova.exception): TRACE:
2011-04-30 22:39:26,395 ERROR nova.compute.manager [VSYI6UB1ZB1L5A549521 seki test] Instance '87' failed to spawn. Is virtualization enabled in the BIOS?
(nova.compute.manager): TRACE: Traceback (most recent call last):
(nova.compute.manager): TRACE: File "/usr/lib/python2.6/site-packages/nova/compute/manager.py", line 236, in run_instance
(nova.compute.manager): TRACE: self.driver.spawn(instance_ref)
(nova.compute.manager): TRACE: File "/usr/lib/python2.6/site-packages/nova/exception.py", line 126, in _wrap
(nova.compute.manager): TRACE: raise Error(str(e))
(nova.compute.manager): TRACE: Error: cannot find 'interfaces'
(nova.compute.manager): TRACE:

It seems that Nova tried to modify the /etc/network/interfaces file on the instance image to inject network configuration but could find that 'interfaces' file. Is this the case? If so, any idea why this would fail?
Or is it looking for the interfaces file on the physical host? If this is the case then I am having a problem since the nova-compute node is running RHEL-6.

Thanks a lot.

Shi