I have tested this on beta2 and beta3. What I am finding is that my kickstart location ends up as 127.0.0.1...

DEFAULT menu
PROMPT 0
MENU TITLE pxe menu
TIMEOUT 50
TOTALTIMEOUT 6000
ONTIMEOUT local

LABEL local
        MENU LABEL (local)
        MENU DEFAULT
        LOCALBOOT -1

LABEL register_sles11p2-i586
        kernel /images/sles11p2/linux
        MENU LABEL sles11p2-i586
        append initrd=/images/sles11p2/initrd ksdevice=bootif lang=  textmode=1 install=http://repo1.chicken.dev/artifactory/sles-11p2-base/i586/ text  autoyast=http://127.0.0.1/cblr/svc/op/ks/profile/sles11p2-i586
        ipappend 2

My next server and server options are set correctly. Has anyone else seen this?