The issue here is that you are not passing java options, but jsvc options.
jsvc accepts -X and -D options and passes them to the underlying JVM. It does not recognize -enableassertions or -server (see man jsvc). It recognizes -ea for -enableassertions though (undocumented, found in 1.0.1 release notes).
Note that OpenJDK uses -server by default so it should not be needed if you used OpenJDK. Not sure about Sun's JVM, but it might have the same default.
So this is not a bug, but maybe we need to document that a little better since the name is misleading (JAVA_OPTS).
Reproduced with OpenJDK / tomcat6 / Ubuntu 9.10
The issue here is that you are not passing java options, but jsvc options.
jsvc accepts -X and -D options and passes them to the underlying JVM. It does not recognize -enableassertions or -server (see man jsvc). It recognizes -ea for -enableassertions though (undocumented, found in 1.0.1 release notes).
Note that OpenJDK uses -server by default so it should not be needed if you used OpenJDK. Not sure about Sun's JVM, but it might have the same default.
So this is not a bug, but maybe we need to document that a little better since the name is misleading (JAVA_OPTS).