Ah right. :) Thanks for showing up, fixed version is available from grml-testing 
and will be shipped with upcoming Grml release (WIP).

Might be due to wrong quoting on my side. I guess ch fixed it correctly while I
was commenting on my somewhat botched solution.

Sorry, I can't reproduce your issues with "-comp gzip" causing mksquashfs to 
remove /bin/gzip.

Neither with:

 * Squashfs build information: running binary mksquashfs using options: -b 256k 
-comp gzip

# unsquashfs -l grml-medium-sid-i386/grml_cd/live/whiskey-ftw.squashfs | grep 
bin/gzip
squashfs-root/bin/gzip
squashfs-root/usr/lib/klibc/bin/gzip

nor with:

 * Squashfs build information: running binary mksquashfs using options: -b 256k 
-comp xz

# unsquashfs -l grml-medium-sid-i386/grml_cd/live/whiskey-ftw-lzma.squashfs | 
grep bin/gzip
squashfs-root/bin/gzip
squashfs-root/usr/lib/klibc/bin/gzip

I'm closing this bugreport therefore, please reopen the issue if you can 
reproduce your problem. Thanks!

Thanks for your patch!

regards,
-mika-

Edit: forget the patch.  Apparently, "-comp gzip" causes mksquashfs to remove
/bin/gzip. As gzip compression is the default, removing "-comp $foo" would
probably be the best solution.

--- grml-live.orig      2011-04-28 18:17:14.345636603 +0200
+++ /usr/sbin/grml-live 2011-04-28 18:17:31.178934824 +0200
@@ -234,7 +234,7 @@
     F) FORCE=1 ;;
     u) UPDATE=1 ;;
     V) VERBOSE="-v" ;;
-    z) SQUASHFS_ZLIB="true" ;;
+    z) SQUASHFS_ZLIB="-comp gzip" ;;
     ?) echo "invalid option -$OPTARG" >&2; bailout 1 ;;
   esac
 done