On a failed download, apt-proxy will create an empty package directory under /var/cache/apt-proxy/ubuntu/pool/main/ and this in turn will cause failures in debootstrap like:
2010-05-24 12:58:26,642 DEBUG : I: Retrieving console-setup
2010-05-24 12:58:26,899 DEBUG : W: Couldn\'t download package console-setup
2010-05-24 12:58:26,908 DEBUG : I: Retrieving console-terminus
2010-05-24 12:58:27,185 DEBUG : I: Validating console-terminus
2010-05-24 12:58:27,203 DEBUG : I: Retrieving coreutils
2010-05-24 12:58:27,470 DEBUG : W: Couldn\'t download package coreutils
which ultimately breaks the image.
check entries for coreutils to see the problem.