I noticed that after boot with an initrd in 2.6.16 the rootfs had:
--w-r-xr-T    1 root     root      
6241141 Jan  1  1970 initrd.image
Which is caused by a small typo:
Signed-off-by: Andrew Morton <akpm@osdl.org>
Signed-off-by: Linus Torvalds <torvalds@osdl.org>
                        return;
                }
                printk("it isn't (%s); looks like an initrd\n", err);
-               fd = sys_open("/initrd.image", O_WRONLY|O_CREAT, 700);
+               fd = sys_open("/initrd.image", O_WRONLY|O_CREAT, 0700);
                if (fd >= 0) {
                        sys_write(fd, (char *)initrd_start,
                                        initrd_end - initrd_start);