have you got Jetty's UnpackWars flag set to true or false (in jboss.jcml - I think) ?
I am aware of a couple of problems running packed, so you should probably set this to true for Velocity.
Pull down the latest release:
Run your webapp in it and send the stacktrace with a description of the problem to firstname.lastname@example.org
We will see what we can do.
Don't hold your breath - we will all be at JBossOne next week.