If you are getting the problem which is written in the title of this post related to a recent upgrade in Debian SID of GRUB2 to version 1.97+20091125-1, then you have to modify your grub.cfg and remove the /boot/ part of the entries referred to the kernel image and initrd in the grub.cfg configuration file.
For more info: http://bugs.debian.org/cgi-bin/bugreport.cgi?bug=558042