IT ...

iptables -t nat -A POSTROUTING -o eth0 -j MASQUERADE

Have to make sure the following modules is selected in kernel and preloaded,
/etc/modules.autoload.d/kernel-2.6
ip_tables
iptable_nat
ipt_MASQUERADE

Or else, iptables will give you unknown error, and a very big number, maybe they should detect and load the necessary modules?

modules iptable_filter is not necessary if you want internet sharing only.

BTW, if iptable_filter is not loaded, "iptables -L" will give you a friendly message, that should be the way.

iptables v1.3.5: can't initialize iptables table `filter': Table does not exist (do you need to insmod?)
Perhaps iptables or your kernel needs to be upgraded.