The server collation acts as the default collation for all system databases that are installed with the instance of SQL Server, and also any newly created user databases. The server collation is specified during SQL Server installation. For more information, see Collation Settings in Setup.
Changing the default collation for an instance of SQL Server can be a complex operation and involves the following steps:
Setup /QUIET /ACTION=REBUILDDATABASE /INSTANCENAME=InstanceName /SQLSYSADMINACCOUNTS=accounts /[ SAPWD= StrongPassword ] /SQLCOLLATION=CollationName
Corrected the syntax required to rebuild the master database.
Also see:
http://blogs.msdn.com/psssql/archive/2008/08/29/how-to-rebuild-system-databases-in-sql-server-2008.aspx