Why do epithelial cells arrest in response to serum?
TGF-beta would be a good candidate. To cite:
"TGF-β inhibits G1/S progression in a variety of eukaryotic cell types. Among these, untransformed epithelial cells are particularly sensitive to the growth inhibition by TGF-β."
http://genesdev.cshlp.org/content/14/24/3093.full

Fetal bovine serum (FBS) contains a high level of latent TGF-β. Human serum as well has high level of TGF-beta (20-50ng/ml)

It is also possible that growth arrest is part of the induction of terminal differentiation by serum factor(s) such as TGFb. 
"Type beta transforming growth factor is the primary differentiation-inducing serum factor for normal human bronchial epithelial cells."
http://www.ncbi.nlm.nih.gov/pubmed/2871553

Edit: got more reputation, so now I can post more than two links. Here is a review on TGFb signalling: http://genesdev.cshlp.org/content/14/6/627.full

Also a link to serum levels of TGFb:
http://www.ncbi.nlm.nih.gov/pubmed/16845225