This is fixed incidentally with the fix for bug 664091, should be in 5.7.

Thanks, I was looking at the patch mentioned in that BZ (https://bugzilla.redhat.com/attachment.cgi?id=469405&action=diff) and it looks like it's already assuming ifcfg-lo$ is in place.. is there another patch which will bring that in to RHEL 5.7?

diff --git a/rc.d/init.d/network b/rc.d/init.d/network
index 482bb7b..b31060b 100755
--- a/rc.d/init.d/network
+++ b/rc.d/init.d/network
@@ -46,7 +46,7 @@ cd /etc/sysconfig/network-scripts
 interfaces=$(ls ifcfg* | \
            LANG=C sed -e "$__sed_discard_ignored_files" \
                       -e '/\(ifcfg-lo$\|:\|ifcfg-.*-range\)/d' \
-                      -e '/ifcfg-[A-Za-z0-9\._-]\+$/ { s/^ifcfg-//g;s/[0-9]/
&/}' | \
+                      -e '/ifcfg-[A-Za-z0-9#\._-]\+$/ { s/^ifcfg-//g;s/[0-9]/
&/}' | \
            LANG=C sort -k 1,1 -k 2n | \
            LANG=C sed 's/ //')
 rc=0

Yes, that patch is a patch to the original patch.

I think this is fixed with

http://rhn.redhat.com/errata/RHSA-2011-1090.html

Closing based on comment 11.