For the curious, the symptom looks like this

Begin: Running /scripts/live-premount ... 
Waiting for ethernet card(s) up... If this fails, maybe the ethernet card is not
supported by the kernel 3.1.0-3-grml-amd64?
Looking for a connected Ethernet interface ... eth0 ? eth1 ? eth2 ? eth3 ?
Connected eth0 found
done.
Using timeout of 60 seconds for network configuration.
Net: Turning on all device links...
If you want to boot from a specific device use bootoption ethdevice=...
Executing ipconfig -t 60 eth0
 IP-Config: eth0 hardware address de:ad:be:ef mtu 1500 DHCP RARP
 IP-Config: eth0 guessed broadcast address 1.2.3.255
 IP-Config: eth0 complete (from 1.2.3.10):
  address 1.2.3.12  broadcast 1.2.3.255 netmask 255.255.255.0
  ..etc..
Executing ipconfig -t 60 eth1
IP-Config: eth1 hardware address de:ad:be:ee mtu 1500 DHCP RARP
IP-Config: no response after 60 secs - giving up
  (repeats for eth2, eth3)
Creating /etc/resolv.conf
Begin: Trying netboot from 1.2.3.4:/path/to/iso/img/2011.12
Begin: Trying nfsmount -o nolock -o ro  1.2.3.4:/path/to/iso/img/2011.12
/live/image ...
done.

It then tries looking in /live/image for *.squashfs, *.ext2, *.ext3, *.ext4,
*.jffs2, *.dir and calls 'panic'.
  panic No supported filesystem images found at /live.

At this point the screen shows a debian swirl with the message
  "BOOT FAILED!"
  This image failed to boot

and several paragraphs of instructions.
A shell is started so you can go look at the live-image.log.

If you try with debug=1 boot option you get much more useful info in the
live-image.log, basically "set -x" output of what is happening behind the scenes.