To configure a network interface to use DHCP:

auto eth0
iface eth0 inet dhcp
        dns-nameservers 192.168.1.254

Or on Etch with hotplug:

allow-hotplug eth0
iface eth0 inet dhcp

To statically configure a network interface:

auto eth0
iface eth0 inet static
        address 192.168.1.1
        netmask 255.255.255.0
        gateway 192.168.1.254
        broadcast 192.168.1.255
        dns-nameservers 192.168.1.254

Then if you have previously used DHCP then until you reboot dhclient will still be running and so you should kill it:

ps ax | grep dhclient
kill -9 12345

Configure the IP alias in /etc/network/interfaces as shown below:

# This file describes the network interfaces available on your system
# and how to activate them. For more information, see interfaces(5).

# Automatically bring up the following interfaces
auto lo eth0 eth0:0

# The loopback network interface
iface lo inet loopback

# The primary network interface
# allow-hotplug eth0
# iface eth0 inet dhcp

# Primary interface
iface eth0 inet static
        address 192.168.1.1
        netmask 255.255.255.0
        gateway 192.168.1.254
        broadcast 192.168.1.255
        dns-nameservers 192.168.1.254
        
# Alias
iface eth0:0 inet static
        address 192.168.1.2
        netmask 255.255.255.0

To remove an IP alias:

ifdown --force eth0:0
ip link set eth0:0 down

IP Subnets