I've found the issue. The system disk is attached to PCI IDE controller, not the one on MB. Somewhere during the boot process the naming changes, so I had to change the 'root' option in grub to point to the correct disk (hde instead of hda). However, the 'mount' command still reports the disk as hda.
I have also gentoo installation on the same disk (different partition), no problems. I suspect the initrd image, is it possible to get rid of it? Where can I get sources for the kernel used? Are there some pluto-specific patches?