I just tried to do that on my Nexus One. I had to rsync from an existing installation, and installed the boot loader manually to get Ubuntu on the micro SD card. The card switched into read only state a few times so I had to remount the card (card not in phone, mounted via integrated card reader) and restart rsync.
It may just be this card, but I have serious doubts that using such memory devices for desktop operating systems is a good idea. Notice that process management and logging cause a lot of writes to the memory and that in turn causes wear.
I tried booting from the card mounted in the Nexus One and hooked up via USB. I was able to choose the phone as boot device on my laptop, but it wasn't able to find the bootloader. It may be specific to Android or the computer that the USB mass storage is not properly detected at boot, since Android disables UMS when it loses the USB connection.
You can try to reinstall the boot loader via Live CD to your SD card while mounted in your Nokia, as it sounds like there is some issue there.
grub-install --root-directory /media/path_to_your_sdcard /dev/device_name_of_your_sdcard
UUID in grub.conf and fstab should already be correct.
However I can not stress this enough: it is not a good idea. Future Android phones will probably drop UMS mode and micro SD card slots in favor of the MTD mode introduced with ICS.