I rooted a 16 gig with 1.5.4 no issues. When I upgraded to 1.5.5, it did not work when I tried on another unit. After many tries, went back to 1.5.4 and it worked.
So, clearly seems there is some bug in 1.5.5 Now, if anyone got 1.5.5 to work, sure would love to know how. 1.5.5 did not load SU or busybox.