auto_assign_floating_ips flag causes NoMoreFloatingIps Zero floating ips error

Under Diablo (2011.3) on Ubuntu 11.10, setting --auto_assign_floating_ip=true in nova.conf causes instances to fail to boot, stuck at pending as it fails to find a valid floating IP address to use despite being set (and able to be set manually).

Steps to recreate:
Manual - works:
1. Ensure --auto_assign_floating_ips=flase (or not present) in nova.conf
2. Add a floating range using nova-manage as per http://docs.openstack.org/diablo/openstack-compute/admin/content/allocating-associating-ip-addresses.html - which incidentally won't accept a hostname as part of the command line

nova-manage create floating 172.241.0.0/24

3. Spin up an instance (so it only has private IPs)
3. Allocate an address to an instance
    euca-allocate-address

4. Associate this
    euca-associate-address -i i-0000000a 172.241.0.1

5. Be happy that you can connect over your routeable address space. Maybe high five someone too.

Automatic
1. Set --auto_assign_floating_ips=true in nova.conf and restart nova-network
2. Start another instance
3. Fails

/var/log/nova/nova-compute and nova-network.log entries here: http://paste.openstack.org/show/3212/