Comment 2 for bug 252900

This is because dpkg requires POSIX operations not supported by VFAT (hardlinks), and unfortunately it is unlikely to be fixed at this stage, particularly since 8.04 is an LTS. A workaround similar to the above is to remove the /boot mountpoint in /etc/fstab and unmount /boot (this basically moves /boot inside of the root filesystem), then copy over the files from /host/disks/boot to /boot and repeat each time you update boot (e.g. new kernel).