Have not nutted the actual problem down yet, but I noticed after updating emacs-snapshot package on my Debian box that M-x eshell fails with this message:
progn: Symbol's value as variable is void: eshell-output-filter-functions
If I uninstall the starter-kit-eshell package and restart emacs, it all works fine (but without the tweaks, of course). It also works fine on emacs24 stable.
I noticed on the Savanna log that they are jiggering around with eshell's library layout or something, which could be causing a clash with this module, somehow. Sorry my elisp is very rudimentary still or I'd try and debug for you. Happy to help though.
Version details are:
emacs-snapshot 2:20120728-1+squeeze (from Julien Danjou's repository http://emacs.naquadah.org stable/ Packages )
starter-kit-eshell 20120316 (from marmalade.org)
I have the exactly the same issue.
Remove eshell ansi workaround. Fixes #146.
This was only necessary to work around broken behaviour in 23.