I have my problem resolved! It was caused by bad driver (sky2) for the marvell on board NIC, we need to use the driver for this NIC for it to work properly, as reported here:
https://bugs.launchpad.net/ubuntu/+s...20/+bug/104929
Here's exactly what I did that worked for me:
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* make a simlink in /usr/src from linux-headers- to linux (sudo ln -s /usr/src/linux-headers-`uname -r` /usr/src/linux). Not sure if this step is necesarry, but did it anyway.
* download the driver as described here:

