According to the Setup Guide, a flashing amber light means:
"Your Time Capsule can’t establish a connection to the network or the Internet, or is encountering a problem. Make sure you have installed AirPort Utility and use it to get information about what might cause the status light to flash amber. See “If Your Time Capsule Status Light Flashes Amber” on page 31."
Then, on page 31 it states:
"If Your Time Capsule Status Light Flashes Amber The Ethernet cable may not be connected properly, your Time Capsule may be out of range of an AirPort network, or there may be a problem with your Internet service provider. If you’re connected to the Internet with a DSL or cable modem, the modem may have lost its connection to the network or the Internet. Even if the modem seems to be working properly, try disconnecting it from its power supply, waiting a few seconds, and then reconnecting it. Make sure your Time Capsule is connected directly to the modem via Ethernet before reconnecting power to the modem. For more information about why the light is flashing, open AirPort Utility, select your Time Capsule, and then choose Manual Setup from the Base Station menu. Click Base Station Status to display information about the flashing light. You can also select “Monitor base station for problems” in AirPort preferences. If the base station has a problem, AirPort Utility opens and walks you through solving the problem."
Try this:
Open up Airport Utility. Make sure your TC is highlighted. Click on the 'Manual Setup' button. Make sure you're on the 'Summary' tab and double click the light next to 'Status' and follow the steps. Hit 'Update' when your done.