Not sure whether this should go into the official bugs reporting system or not, but anyway:

Using sudo_1.6.8p8-1_armv5tel.ipk from the 1.10 feed. A couple of problems:

1) The sudo binary does not have the setuid bit set. The fix is:
chmod u+s /usr/bin/sudo

2) The file /etc/sudoers has the wrong permissions. The fix is:

chmod 0440 /etc/sudoers

-- cheers