Hi, I'm using the 20100314 cooking version and I get the kernel panic after I write my filesystem to the USB drive.
Here is the log:
# Generating a liveUSB
    # using the cooking 20100314 version
    boot: slitaz vga=791
    fdisk -l
    tazusb format /dev/sdb1
    tazusb gen-liveusb /dev/sdb1
        cp: cannot stat /media/cdrom/boot/isolinux/*.inc': No such file or directory
        # I think that despite the error, the liveUSB was created successfully
    reboot
    # eject cdrom
    # the system booted correctly, no errors
    # preserving the system changes
    tazusb writefs none
        sound card selection [no?] [Enter]
        remove screen resolution [no?] [Enter]
    umount /home
    # waiting
    reboot
    boot: slitaz vga=791
        kernel panic!
        RAMDISK: Couldn't find valid RAM disk image starting at 0.
        VFS: Cannot open root device "null" or unknown-block(0,0)
        Please append a correct "root=" root option; here are the available partitions:
        0800 39070080 sda driver: sd
         0801 39070048 sda1
        0b00 1048575 sr0 driver: sr
        Kernel panic - not syncing: VFS: Unable to mount root fs on unknown-block(0,0)
        Pid: 1, comm: swapper Not tained 2.6.30.6-slitaz #1
        Call Trace:
    # trying to boot the USB with the usb=home kernel parameter
    boot: slitaz home=usb
        # the effect is the same as above
    reboot
    # trying to boot the previous.gz filesystem
    boot: previous
        # Could not find kernel image: previous
Here are the contents of my /boot directory on the USB (besides the rootfs.gz and previous.gz files)
http://www.speedyshare.com/files/23754894/bzImage.zip
http://www.speedyshare.com/files/23754913/extlinux.zip