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I run Debian Sarge Network install. It seems that when booting USB hotplugs fail and hang/freeze the system. The system won't boot up. I have tried disabling USB, and that didn't work. Uninstalling hotplugs would be bad as I have a USB Keyboard + Mouse. What can I do?
The hotplug package is needed only for the autodetection of hot-plugged devices "on the fly". It is not needed for USB keyboards and mice. Just compile the UDB keyboard support to your kernel and you'll be fine.
Similarly, you can configure X to use a USB mouse without having the hotplug package.