When I was troubleshooting a DHCP Server, I found that in the /etc/dhcp3/dhcpd.conf file someone had declared a subnet with an IP range which was not the same as the server.

For example, this would not work:

Interface: 192.168.1.1

subnet 192.168.0.0 netmask 255.255.255.0 {}

But this would:

subnet 192.168.1.0 netmask 255.255.255.0 {}

Because the subnet range is the same as the server.
Hope this helps.