Carte de Séjour / Titre de Séjour for EU persons?

I am going to start up an auto-entrepreneur business in France through the Pôle Emploi initiative, having registered 1/3/10 as unemployed but not due any chomage as I only became unemployed at beginning of October 2009. I had a business in the UK which I had to walk away from losing all my capital investment. I do own a house outright, here in France, but do not have any savings or income. I have wanted to live here since being a teenager and I intend to remain in France as have no family connections that would ever make me return to the UK.

Pôle Emploi are helping me put together my dossier, business plan etc. and I am hoping that I will be eligible for ACCRE by requesting RSA (although at the rate everything has been going, I will have been unemployed for the statutory six months by the time this all happens). I have my SS and Carte Vitale and have filled in the various forms at the CAF for RSA. On several occasions I have asked people if it is true that I need a Carte de Séjour. Each person I have asked has said that it is not necessary as I am an EU citizen.

I have just received a Demande de Pièces letter from the CAF with overture de votre droit RSA  asking for la copie lisible recto-verso de votre titre de séjour en cours de validité. I can’t remember if I asked the CAF at my initial interview (although I do remember that it was fairly traumatic and they said that I might not have the right to stay in France – so I guess that was probably the clue).

Looking at this site it would look like I do need one. Does this mean I’m going to have to go through all of this again, wait another … months before I can get some financial help, or worse, be told I am not welcome in France?