We are indeed aware of the problem you are seeing and it had been slated to be fixed.
While I am not aware of the precise nature of the problem, it has soemthing to do with the fact that the Connect ME is shipped out of the factory with a file system already in flash.
Until a permanent fix is put into the File System API I can offer you a modified version of the NAFlash example that will erase everything in the flash, short of the BOOT and POST sectors, which are required in order for the device to properly boot and load you NET+OS application.
The file, eraseFlash.zip, can be obtained via ftp://ftp.digi.com/incoming/tech_support/ConnectME/examples/eraseFlash.zip.
I have not performed a detailed test of this application, however, it has proven to work for me without incident. If you experience problems let me know. You are certainly free to modify the program further.
Once you have successfully run 'eraseFlash' you should be able to successfully load your file system enabled example.
Technical Support Engineer