I used the image mentioned earlier and put it on a 4GB SD card. After the first boot to ubuntu I followed the instructions here:
and executed 'depmod -a' and rebooted.
On reboot the wireless worked fine and connected. But I still couldn't access the internet unless I was root. I found this page:
Looks like the image we are using was built with CONFIG_ANDROID_PARANOID_NETWORK set.
I created the aid_inet group and added myself. Now the internet works fine for me.