To high an epsilon will result in so-called peter-panning (objects look like they hover above ground). It's hard to get straight forward shadow mapping right - if possible at all.
Edit:
Notice the color is 0, I don't see how that can possibly work, shouldn't it be 0xffffffff ? In fact, that's why my original setup wasn't working, I was clearing it to zero and not one.
You're right, it should be. Depends, though. The SDK sample e.g. is "indoors" so I guess every pixel gets drawn anyway (you wouldn't even need a target clear).