See https://www.denx.de/wiki/view/DULG/RootFileSystemOnACramfsFileSystem and also http://processors.wiki.ti.com/index.php/Create_a_CRAMFS_Target_Image
I haven't had any issues when creating and flashing a cramfs image according to description in the links above.
mkfs.cramfs -b 4096 -N little filesystem/rootfs rootfs.cramfs