I ended up choosing another way to doing the same thing, based off the guide here - using /hosts/networks is probably better if you need an always on hostapd AP, but probably less use otherwise.
Here's my /etc/networks file - I've set wlan0 as manual , and bridged eth0.
# wireless wlan0
allow-hotplug wlan0
iface wlan0 inet manual
# eth0 connected to the ISP router
allow-hotplug eth0
iface eth0 inet manual
#iface eth0 inet6 auto
# Setup bridge
iface br0 inet static
bridge_ports wlan0 eth0
address 192.168.1.127
netmask 255.255.255.0
network 192.168.1.0
gateway 192.168.1.1
dns-nameservers 192.168.1.1
Your hostapd.conf might also be of interest there - this is a stripped down version of mine, since I chose to edit the 'stock' one. I suspect its pretty likely your problem might be there.
### Wireless network name ###
interface=wlan0
### Set your bridge name ###
bridge=br0
driver=nl80211
###CHANGE ANYTHING BELOW THIS TO SUIT!###
### (IN == INDIA, UK == United Kingdom, US == United Stats and so on ) ###
country_code=SG
hw_mode=g
channel=6
wpa=2
## Key management algorithms ##
wpa_key_mgmt=WPA-PSK
## Set cipher suites (encryption algorithms) ##
## TKIP = Temporal Key Integrity Protocol
## CCMP = AES in Counter mode with CBC-MAC
wpa_pairwise=TKIP
rsn_pairwise=CCMP
## Shared Key Authentication ##
auth_algs=1
## Accept all MAC address ###
macaddr_acl=0