Jay, failsafe mode isn't all that interesting. With Ubuntu 10.04 - 11.04, the system would boot into "multi user" mode before all "static" network connections were available. This is fine for a laptop or desktop, because NetworkManager manages connections in a way where most GUI programs are ready to have their network connection gone. But for servers, this is unacceptable, as some of the network services require there to be a specific network configuration before they start.
The failsafe mode is just a way to get the system to continue booting, even if these network interfaces are not available. Its essentially a timeout after 2 minutes of waiting, nothing more.