On my own pxeboot server, I launch it from inetd (avoiding ugly xinetd),
so the /etc/default/tftpd-hpa file looks like this (and is never used):

#Defaults for tftpd-hpa
RUN_DAEMON="no"
OPTIONS="-l -s /var/lib/tftpboot"

.. and I have this one line in my /etc/inetd.conf file:

tftp dgram udp wait root /usr/sbin/tcpd /usr/sbin/in.tftpd -vvv -t 10 -s /tftpboot

My boot stuff is all under the /tftpboot directory.