I've got one plug running gentoo pretty successfully from nand. It's very easy. The part I'm working on is moving that installation to a usb drive. But to get it booted up, follow these intructions:
Assumptions:
You are sharing TFTP and NFS from another linux computer and have export /tftpboot and untard hentoo_sheevaplug_200M_selinux.tar.bz2
to /tftpboot/sheevaselinux and you have the default uImage and default rootfs from the installation cd or another source in /tftpboot and /tftpboot/sheevaroot
1) On the NFS host Copy uImage.6plug and gentoo_sheevaplug_70M_selinux.jffs2 into /tftpboot/sheevaroot
2) TFTPboot the plug into the default uIamge.sheeva.whateverdate with rootpath /tftpboot/sheevaroot
uBoot Environment for TFTP
Hit any key to stop autoboot: 0
set mainlineLinux no
set arcNumber 2097
set image_name uImage.sheeva.20090319
set tftp_rootpath /tftpboot/sheevaroot
set ipaddr <your ip address>
set serverip <your nfs/tftp server>
set hostname <your plugs name>
set netmask <your subnet mask>
set gw-ip <your router>
set console console=ttyS0,115200
set mtdargs1 'mtdparts=nand_mtd:0x100000@0x00000(uBoot)ro,0x500000@0x100000(uImage),-(rootFS)'
set bootargs_root_tftp 'root=/dev/nfs rw'
set bootargs_nfs nfsroot=${serverip}:${rootpath}
set bootargs_end ip=${ipaddr}:${serverip}:${gw-ip}:${netmask}:${hostname}:eth0:none
set setboot_tftp 'set bootargs ${console} ${mtdargs1} ${bootargs_root_tftp} ${bootargs_nfs} ${bootargs_end}'
set bootcmd_tftp 'set bootcmd tftpboot 0x2000000 ' ${image_name}';bootm 0x2000000'
set setbootcmd_tftp 'set bootcmd ${bootcmd_tftp}'
set boottftp 'run setboot_tftp;run setbootcmd_tftp;save'
save
run boottftp
reset
3) If all went well you are at a -sh-3.2> prompt
cd /
ls
#make sure you see uIamge6.plug and gentoo_sheeveplug_70M_selinux.jffs. If not, go back to step 1
flash_eraseall -j /dev/mtd1
flash_eraseall -j /dev/mtd2
nandwrite -pm /dev/mtd1 /uImage.6plug
nandwrite -pm /dev/mtd2 /gentoo_sheevaplug_70M_selinux.jffs
reboot
6) Interrupt the boot process and change your environment
set bootargs_root_nand 'root=/dev/mtdblock2 rw'
set setboot_nand 'set bootargs ${console} ${mtdargs1} ${bootargs_root_nand} ${bootargs_end}'
set bootcmd_nand 'nand read.e 0x800000 0x100000 0x400000; bootm 0x800000'
set setbootcmd_nand 'set bootcmd ${bootcmd_nand}'
set bootnand 'run setboot_nand;run setbootcmd_nand;save'
save
run boottftp
reset
7) You are going to see a whole bunch of selinux errors and audits flash by. Ignore them. Eventually you will arrive at a bootprompt. Login is root/plugtop

run the command modules_update
That should be enought to get you going.