Are you running freelink (Debain)?
I'm using the dhcp-approach (IP of the LS is defined by the DHCP server of my router and the DNS-Server is determined automatically):
iface lo inet loopback
iface eth0 inet dhcp
pre-up ifconfig eth0 mtu 9014
send host-name "linkstation";
send dhcp-client-identifier 00:00:00:00:00:00;
request subnet-mask, broadcast-address, time-offset, routers,
domain-name, domain-name-servers, host-name,
netbios-name-servers, netbios-scope, interface-mtu;
00:00:00:00:00:00 is actually the MAC address of my LS which I modified for this posting.