Bug#538743: Not sure if you got my earlier reply ...

[blaz]

This does it for me:
Edit device.map and change the sda devices to hda.
(Manually make a backup of grub.cfg ? )
run update-grub (2) and get lots of errors
inspect the grub.cfg and all lines are empty after set root=
"ls /boot/grub/grub.*" just shows the mangled grub.cfg, no grub.cfg.new

This example is easy to fix, even without the backup.
Just fix device.map and rerun update-grub. But still ...