diff --git a/bindep.txt b/bindep.txt
index 4f9b4254..5a9c382e 100644
--- a/bindep.txt
+++ b/bindep.txt
@@ -1,2 +1,3 @@
 # This is a cross-platform list tracking distribution packages needed by tests;
 # see http://docs.openstack.org/infra/bindep/ for additional information.
+squashfs-tools
diff --git a/diskimage_builder/elements/bootloader/README.rst b/diskimage_builder/elements/bootloader/README.rst
index ecfefc42..86f75914 100644
--- a/diskimage_builder/elements/bootloader/README.rst
+++ b/diskimage_builder/elements/bootloader/README.rst
@@ -1,7 +1,14 @@
 ==========
 bootloader
 ==========
-Installs grub[2] on boot partition on the system. In case GRUB2
-is not available in the system, a fallback to Extlinux will happen. It's
-also possible to enforce the use of Extlinux by exporting a DIB_EXTLINUX
-variable to the environment.
+
+Installs ``grub[2]`` on boot partition on the system. In case GRUB2 is
+not available in the system, a fallback to Extlinux will happen. It's
+also possible to enforce the use of Extlinux by exporting a
+``DIB_EXTLINUX`` variable to the environment.
+
+Arguments
+=========
+
+* ``DIB_GRUB_TIMEOUT`` sets the ``grub`` menu timeout.  It defaults to
+  5 seconds.  Set this to 0 (no timeout) for fast boot times.
diff --git a/diskimage_builder/elements/bootloader/finalise.d/50-bootloader b/diskimage_builder/elements/bootloader/finalise.d/50-bootloader
index d6e0d53d..0769c3c3 100755
--- a/diskimage_builder/elements/bootloader/finalise.d/50-bootloader
+++ b/diskimage_builder/elements/bootloader/finalise.d/50-bootloader
@@ -53,7 +53,7 @@ function install_grub2 {
     if [ -f "/tmp/grub/install" ] ; then
         source /tmp/grub/install
     elif [[ "$ARCH" =~ "ppc" ]]; then
-        install-packages -m bootloader grub-ieee1275
+        install-packages grub-ieee1275
     else
         install-packages -m bootloader grub-pc
     fi
@@ -127,6 +127,7 @@ function install_grub2 {
         GRUB_CFG=/boot/grub/grub.cfg
     fi
 
+    echo "GRUB_TIMEOUT=${DIB_GRUB_TIMEOUT:-5}" >>/etc/default/grub
     echo 'GRUB_TERMINAL="serial console"' >>/etc/default/grub
     echo 'GRUB_GFXPAYLOAD_LINUX=text' >>/etc/default/grub
     echo 'GRUB_CMDLINE_LINUX_DEFAULT="console=tty0 console=ttyS0,115200 no_timer_check"' >>/etc/default/grub
diff --git a/diskimage_builder/elements/cloud-init/README.rst b/diskimage_builder/elements/cloud-init/README.rst
index e76e956b..707823e4 100644
--- a/diskimage_builder/elements/cloud-init/README.rst
+++ b/diskimage_builder/elements/cloud-init/README.rst
@@ -10,7 +10,7 @@ Currently only supports Gentoo.
 Environment Variables
 ---------------------
 
-DIB_CLOUD_INIT_ALLOW_PASS_AUTH
+DIB_CLOUD_INIT_ALLOW_SSH_PWAUTH
   :Required: No
   :Default: password authentication disabled when cloud-init installed
   :Description: customize cloud-init to allow ssh password
diff --git a/diskimage_builder/elements/dib-python/environment.d/50-dib-python-version b/diskimage_builder/elements/dib-python/environment.d/50-dib-python-version
index 27331dbd..58a5dc7a 100644
--- a/diskimage_builder/elements/dib-python/environment.d/50-dib-python-version
+++ b/diskimage_builder/elements/dib-python/environment.d/50-dib-python-version
@@ -16,6 +16,8 @@ if [ -z "${DIB_PYTHON_VERSION:-}" ]; then
         DIB_PYTHON_VERSION=2
     elif [ "$DISTRO_NAME" == "centos7" ]; then
         DIB_PYTHON_VERSION=2
+    elif [ "$DISTRO_NAME" == "rhel7" ]; then
+        DIB_PYTHON_VERSION=2
     elif [ "$DISTRO_NAME" == "opensuse" ]; then
         DIB_PYTHON_VERSION=2
     fi
diff --git a/diskimage_builder/elements/ironic-agent/element-deps b/diskimage_builder/elements/ironic-agent/element-deps
index 27cda407..39d86461 100644
--- a/diskimage_builder/elements/ironic-agent/element-deps
+++ b/diskimage_builder/elements/ironic-agent/element-deps
@@ -3,5 +3,6 @@ no-final-image
 package-installs
 pip-and-virtualenv
 pkg-map
+runtime-ssh-host-keys
 source-repositories
 svc-map
diff --git a/diskimage_builder/elements/openssh-server/post-install.d/80-enable-sshd-service b/diskimage_builder/elements/openssh-server/post-install.d/80-enable-sshd-service
index 50238bbc..ee59b3a4 100755
--- a/diskimage_builder/elements/openssh-server/post-install.d/80-enable-sshd-service
+++ b/diskimage_builder/elements/openssh-server/post-install.d/80-enable-sshd-service
@@ -22,8 +22,12 @@ case "$DIB_INIT_SYSTEM" in
         # let dib-init-system's postinstall handle enabling init scripts
         exit 0
         ;;
+    sysv)
+        # ssh is enabled by default, nothing to do
+        exit 0
+        ;;
     *)
-        echo "Unsupported init system"
+        echo "Unsupported init system $DIB_INIT_SYSTEM"
         exit 1
         ;;
 esac
diff --git a/diskimage_builder/elements/opensuse-minimal/README.rst b/diskimage_builder/elements/opensuse-minimal/README.rst
index 46df3c17..7abe6e5b 100644
--- a/diskimage_builder/elements/opensuse-minimal/README.rst
+++ b/diskimage_builder/elements/opensuse-minimal/README.rst
@@ -13,7 +13,7 @@ Environment Variables
 
 DIB_RELEASE
   :Required: No
-  :Default: 42.1
+  :Default: 42.2
   :Description: Set the desired openSUSE release.
 
 DIB_OPENSUSE_MIRROR:
diff --git a/diskimage_builder/elements/opensuse-minimal/environment.d/10-opensuse-distro-name.bash b/diskimage_builder/elements/opensuse-minimal/environment.d/10-opensuse-distro-name.bash
index c6aafbbc..db0f4756 100644
--- a/diskimage_builder/elements/opensuse-minimal/environment.d/10-opensuse-distro-name.bash
+++ b/diskimage_builder/elements/opensuse-minimal/environment.d/10-opensuse-distro-name.bash
@@ -1,5 +1,5 @@
 export DISTRO_NAME=opensuse
-DIB_RELEASE=${DIB_RELEASE:-42.1}
+DIB_RELEASE=${DIB_RELEASE:-42.2}
 export DIB_RELEASE=${DIB_RELEASE,,}
 export DIB_OPENSUSE_MIRROR=${DIB_OPENSUSE_MIRROR:-http://download.opensuse.org}
 case ${DIB_RELEASE} in
diff --git a/diskimage_builder/elements/opensuse/README.rst b/diskimage_builder/elements/opensuse/README.rst
index 5ca0da5e..287f7db2 100644
--- a/diskimage_builder/elements/opensuse/README.rst
+++ b/diskimage_builder/elements/opensuse/README.rst
@@ -18,7 +18,7 @@ Environment Variables
 
 DIB_RELEASE
   :Required: No
-  :Default: 13.1
+  :Default: 42.2
   :Description: Set the desired openSUSE release.
 
 DIB_CLOUD_IMAGES
diff --git a/diskimage_builder/elements/opensuse/environment.d/10-opensuse-distro-name.bash b/diskimage_builder/elements/opensuse/environment.d/10-opensuse-distro-name.bash
index 38efb86f..a9d195eb 100644
--- a/diskimage_builder/elements/opensuse/environment.d/10-opensuse-distro-name.bash
+++ b/diskimage_builder/elements/opensuse/environment.d/10-opensuse-distro-name.bash
@@ -1,5 +1,5 @@
 export DISTRO_NAME=opensuse
-export DIB_RELEASE=${DIB_RELEASE:-13.1}
+export DIB_RELEASE=${DIB_RELEASE:-42.2}
 case ${DIB_RELEASE} in
     # Old openSUSE releases
     13*) export OPENSUSE_REPO_DIR=openSUSE_${DIB_RELEASE} ;;
diff --git a/diskimage_builder/elements/opensuse/test-elements/build-succeeds/README.rst b/diskimage_builder/elements/opensuse/test-elements/build-succeeds/README.rst
new file mode 100644
index 00000000..49ba1444
--- /dev/null
+++ b/diskimage_builder/elements/opensuse/test-elements/build-succeeds/README.rst
@@ -0,0 +1 @@
+Verify we can build an openSUSE image.
diff --git a/diskimage_builder/elements/runtime-ssh-host-keys/post-install.d/80-ssh-keygen b/diskimage_builder/elements/runtime-ssh-host-keys/post-install.d/80-ssh-keygen
index 926a12d6..48a84448 100755
--- a/diskimage_builder/elements/runtime-ssh-host-keys/post-install.d/80-ssh-keygen
+++ b/diskimage_builder/elements/runtime-ssh-host-keys/post-install.d/80-ssh-keygen
@@ -24,8 +24,12 @@ case "$DIB_INIT_SYSTEM" in
         # let dib-init-system's postinstall handle enabling init scripts
         exit 0
         ;;
+    sysv)
+        # nothing to do
+        exit 0
+        ;;
     *)
-        echo "Unsupported init system"
+        echo "Unsupported init system $DIB_INIT_SYSTEM"
         exit 1
         ;;
 esac
diff --git a/diskimage_builder/elements/ubuntu-minimal/test-elements/build-succeeds/README.rst b/diskimage_builder/elements/ubuntu-minimal/test-elements/precise-build-succeeds/README.rst
similarity index 100%
rename from diskimage_builder/elements/ubuntu-minimal/test-elements/build-succeeds/README.rst
rename to diskimage_builder/elements/ubuntu-minimal/test-elements/precise-build-succeeds/README.rst
diff --git a/diskimage_builder/elements/ubuntu-minimal/test-elements/precise-build-succeeds/environment.d/10-set-distro.bash b/diskimage_builder/elements/ubuntu-minimal/test-elements/precise-build-succeeds/environment.d/10-set-distro.bash
new file mode 100644
index 00000000..3747859b
--- /dev/null
+++ b/diskimage_builder/elements/ubuntu-minimal/test-elements/precise-build-succeeds/environment.d/10-set-distro.bash
@@ -0,0 +1 @@
+export DIB_RELEASE=precise
diff --git a/diskimage_builder/elements/ubuntu-minimal/test-elements/trusty-build-succeeds/README.rst b/diskimage_builder/elements/ubuntu-minimal/test-elements/trusty-build-succeeds/README.rst
new file mode 100644
index 00000000..b7190827
--- /dev/null
+++ b/diskimage_builder/elements/ubuntu-minimal/test-elements/trusty-build-succeeds/README.rst
@@ -0,0 +1 @@
+Verify we can build a ubuntu-minimal image.
diff --git a/diskimage_builder/elements/ubuntu-minimal/test-elements/trusty-build-succeeds/environment.d/10-set-distro.bash b/diskimage_builder/elements/ubuntu-minimal/test-elements/trusty-build-succeeds/environment.d/10-set-distro.bash
new file mode 100644
index 00000000..02d902a4
--- /dev/null
+++ b/diskimage_builder/elements/ubuntu-minimal/test-elements/trusty-build-succeeds/environment.d/10-set-distro.bash
@@ -0,0 +1 @@
+export DIB_RELEASE=trusty
diff --git a/diskimage_builder/elements/ubuntu-minimal/test-elements/xenial-build-succeeds/README.rst b/diskimage_builder/elements/ubuntu-minimal/test-elements/xenial-build-succeeds/README.rst
new file mode 100644
index 00000000..b7190827
--- /dev/null
+++ b/diskimage_builder/elements/ubuntu-minimal/test-elements/xenial-build-succeeds/README.rst
@@ -0,0 +1 @@
+Verify we can build a ubuntu-minimal image.
diff --git a/diskimage_builder/elements/ubuntu-minimal/test-elements/xenial-build-succeeds/environment.d/10-set-distro.bash b/diskimage_builder/elements/ubuntu-minimal/test-elements/xenial-build-succeeds/environment.d/10-set-distro.bash
new file mode 100644
index 00000000..7cc2c887
--- /dev/null
+++ b/diskimage_builder/elements/ubuntu-minimal/test-elements/xenial-build-succeeds/environment.d/10-set-distro.bash
@@ -0,0 +1 @@
+export DIB_RELEASE=xenial
diff --git a/diskimage_builder/elements/zypper-minimal/root.d/08-zypper-chroot b/diskimage_builder/elements/zypper-minimal/root.d/08-zypper-chroot
index 7e4b22d0..81d49176 100755
--- a/diskimage_builder/elements/zypper-minimal/root.d/08-zypper-chroot
+++ b/diskimage_builder/elements/zypper-minimal/root.d/08-zypper-chroot
@@ -1,6 +1,6 @@
 #!/bin/bash
 #
-# Copyright 2016 SUSE Linux Products Gmb
+# Copyright 2016 SUSE Linux GmbH
 # Copyright 2015 Hewlett-Packard Development Company, L.P.
 #
 # Licensed under the Apache License, Version 2.0 (the "License"); you may
diff --git a/diskimage_builder/lib/disk-image-create b/diskimage_builder/lib/disk-image-create
index 0814bf41..ea0f6835 100644
--- a/diskimage_builder/lib/disk-image-create
+++ b/diskimage_builder/lib/disk-image-create
@@ -48,7 +48,7 @@ function show_options () {
     echo "Options:"
     echo "    -a i386|amd64|armhf -- set the architecture of the image(default amd64)"
     echo "    -o imagename -- set the imagename of the output image file(default image)"
-    echo "    -t qcow2,tar,vhd,docker,aci,raw -- set the image types of the output image files (default qcow2)"
+    echo "    -t qcow2,tar,tgz,squashfs,vhd,docker,aci,raw -- set the image types of the output image files (default qcow2)"
     echo "       File types should be comma separated. VHD outputting requires the vhd-util"
     echo "       executable be in your PATH. ACI outputting requires the ACI_MANIFEST "
     echo "       environment variable be a path to a manifest file."
@@ -202,12 +202,22 @@ for X in ${!IMAGE_TYPES[@]}; do
                 exit 1
             fi
             ;;
+        tgz)
+            # Force tar to be created.
+            IMAGE_TYPES+=('tar')
+            ;;
         vhd)
             if [ -z "$(which vhd-util)" ]; then
                 echo "vhd output format specified but no vhd-util executable found."
                 exit 1
             fi
             ;;
+        squashfs)
+            if [ -z "$(which mksquashfs)" ]; then
+                echo "squashfs output format specified but no mksquashfs executable found."
+                exit 1
+            fi
+            ;;
         docker)
             if [ -z "$(which docker)" ]; then
                 echo "docker output format specified but no docker executable found."
@@ -454,6 +464,10 @@ for X in ${!IMAGE_TYPES[@]} ; do
     fi
     sudo chown $USER: $IMAGE_NAME.${IMAGE_TYPES[$X]}
     unset IMAGE_TYPES[$X]
+  elif [ "${IMAGE_TYPES[$x]}" == "squashfs" ]; then
+    sudo mksquashfs ${TMP_BUILD_DIR}/mnt $IMAGE_NAME.squash -comp xz \
+                    -noappend -root-becomes ${TMP_BUILD_DIR}/mnt \
+                    -wildcards -e "proc/*" -e "sys/*" -no-recovery
   elif [ "${IMAGE_TYPES[$X]}" == "docker" ]; then
     sudo tar -C ${TMP_BUILD_DIR}/mnt -cf - --exclude ./sys \
              --exclude ./proc --xattrs --xattrs-include=\* . \
@@ -487,7 +501,7 @@ if [[ (! $IMAGE_ELEMENT =~ no-final-image) && "$IS_RAMDISK" == "0" ]]; then
     # We have to do raw last because it is destructive
     if [ "$IMAGE_TYPE" = "raw" ]; then
       has_raw_type=1
-    else
+    elif [ "$IMAGE_TYPE" != "squashfs" ]; then
       compress_and_save_image $IMAGE_NAME.$IMAGE_TYPE
     fi
   done
diff --git a/diskimage_builder/lib/img-functions b/diskimage_builder/lib/img-functions
index bc02ff60..2ab320ec 100644
--- a/diskimage_builder/lib/img-functions
+++ b/diskimage_builder/lib/img-functions
@@ -70,7 +70,7 @@ function run_in_target () {
     # Bug: #1330290
     # Force the inclusion of a typical set of dirs in PATH, this is needed for guest
     # distros that have path elements not in the host PATH.
-    sudo -E chroot $TMP_MOUNT_PATH env -u TMPDIR PATH="\$PATH:/usr/local/sbin:/usr/local/bin:/usr/sbin:/usr/bin:/sbin:/bin" sh -c "$cmd"
+    sudo -E chroot $TMP_MOUNT_PATH env -u TMPDIR -u VIRTUAL_ENV PATH="\$PATH:/usr/local/sbin:/usr/local/bin:/usr/sbin:/usr/bin:/sbin:/bin" sh -c "$cmd"
     export HOME=$ORIG_HOME
 }
 
@@ -129,6 +129,9 @@ function compress_and_save_image () {
     fi
     if [ "$IMAGE_TYPE" = "raw" ]; then
         mv $TMP_IMAGE_PATH $1-new
+    elif [ "$IMAGE_TYPE" == "tgz" ]; then
+        gzip -9 < $IMAGE_NAME.tar > $1-new
+        rm $IMAGE_NAME.tar
     elif [ "$IMAGE_TYPE" == "vhd" ]; then
         cp $TMP_IMAGE_PATH $1-intermediate
         vhd-util convert -s 0 -t 1 -i $1-intermediate -o $1-intermediate
diff --git a/doc/source/user_guide/building_an_image.rst b/doc/source/user_guide/building_an_image.rst
index a8401364..4b0c436a 100644
--- a/doc/source/user_guide/building_an_image.rst
+++ b/doc/source/user_guide/building_an_image.rst
@@ -51,6 +51,8 @@ formats are:
 
  * qcow2
  * tar
+ * tgz
+ * squashfs
  * vhd
  * docker
  * raw
diff --git a/releasenotes/notes/grub-timeout-1cdd14a2b1467d89.yaml b/releasenotes/notes/grub-timeout-1cdd14a2b1467d89.yaml
new file mode 100644
index 00000000..cedbc2fd
--- /dev/null
+++ b/releasenotes/notes/grub-timeout-1cdd14a2b1467d89.yaml
@@ -0,0 +1,6 @@
+---
+features:
+  - The ``bootloader`` element will explicitly set the timeout to
+    ``5`` seconds when using ``grub`` (previously this was undefined,
+    but platform defaults were usually 5 seconds).  Set this to ``0``
+    for faster boots.
diff --git a/releasenotes/notes/squashfs-output-91c1f0dc37474d3c.yaml b/releasenotes/notes/squashfs-output-91c1f0dc37474d3c.yaml
new file mode 100644
index 00000000..98b1c5a2
--- /dev/null
+++ b/releasenotes/notes/squashfs-output-91c1f0dc37474d3c.yaml
@@ -0,0 +1,3 @@
+---
+features:
+  - New squashfs image output format.
diff --git a/setup.cfg b/setup.cfg
index cbc487c7..82df6459 100644
--- a/setup.cfg
+++ b/setup.cfg
@@ -8,10 +8,11 @@ author-email = openstack-dev@lists.openstack.org
 license: Apache License (2.0)
 home-page = http://docs.openstack.org/developer/diskimage-builder/
 classifier =
-    Development Status :: 3 - Alpha
+    Development Status :: 5 - Production/Stable
     License :: OSI Approved :: Apache Software License
     Operating System :: POSIX :: Linux
     Programming Language :: Python :: 2.7
+    Programming Language :: Python :: 3
     Environment :: Console
 
 [build_sphinx]
diff --git a/tests/run_functests.sh b/tests/run_functests.sh
index a07a0811..53334d97 100755
--- a/tests/run_functests.sh
+++ b/tests/run_functests.sh
@@ -16,6 +16,10 @@ export DIB_ELEMENTS=$(python -c '
 import diskimage_builder.paths
 diskimage_builder.paths.show_path("elements")')
 
+# Setup sane locale defaults, because this information is leaked into DIB.
+export LANG=en_US.utf8
+export LC_ALL=
+
 #
 # Default skip tests
 #
@@ -27,11 +31,11 @@ DEFAULT_SKIP_TESTS=(
     fedora/build-succeeds
     # in non-voting
     gentoo/build-succeeds
+    opensuse/build-succeeds
+    ubuntu-minimal/precise-build-succeeds
     # good to have the test case around - but because of changes
     # in testing does not work always.
     debian-minimal/testing-build-succeeds
-    # Currently failing due to bug in locale generation
-    centos-minimal/build-succeeds
     # No longer reasonable to test upstream (lacks a mirror in infra)
     centos/build-succeeds
 )
@@ -202,7 +206,12 @@ while getopts ":hlj:t" opt; do
             echo "The available functional tests are:"
             echo
             for t in ${TESTS[@]}; do
-                echo "  $t"
+                echo -n "  $t"
+                if [[ " ${DEFAULT_SKIP_TESTS[@]} " =~ " ${t} " ]]; then
+                    echo " [skip]"
+                else
+                    echo " [run]"
+                fi
             done
             echo
             exit 0
diff --git a/tests/run_output_format_test.sh b/tests/run_output_format_test.sh
index b2f435ad..8f2e968a 100755
--- a/tests/run_output_format_test.sh
+++ b/tests/run_output_format_test.sh
@@ -59,8 +59,8 @@ function build_test_image() {
     fi
 }
 
-test_formats="tar raw qcow2 docker aci"
-for binary in qemu-img docker ; do
+test_formats="tar tgz squashfs raw qcow2 docker aci"
+for binary in qemu-img docker mksquashfs; do
     if [ -z "$(which $binary)" ]; then
         echo "Warning: No $binary binary found, cowardly refusing to run tests."
         exit 1
diff --git a/tox.ini b/tox.ini
index c9ad4159..b69c0312 100644
--- a/tox.ini
+++ b/tox.ini
@@ -1,5 +1,5 @@
 [tox]
-envlist = py34,py27,pep8
+envlist = py35,py27,pep8
 minversion = 1.6
 skipsdist = True