The problem was due to my CD drive, QSI SBW-242, causing occasional system freezes, when used with UDMA/33. (Actually, forcing UDMA/25 or 16 makes the freezes occur much more often). So, adding 'options libata force=2.00:pio4' instead, also worked for me.
I have managed to find a workaround for installation from Ubuntu 8.10 livecd:
1) Boot with "break=top" option
2) At BusyBox prompt, execute
echo 'options libata dma=0' >> /etc/modprobe. d/options
3) Ctrl-D, and continue install as usual
The problem was due to my CD drive, QSI SBW-242, causing occasional system freezes, when used with UDMA/33. (Actually, forcing UDMA/25 or 16 makes the freezes occur much more often). So, adding 'options libata force=2.00:pio4' instead, also worked for me.