I can confirm that the same thing happened to me. After before 1-2 hours i did 
a dist-upgrade and system wont boot after reboot.
The system hangs after /scripts/init-bottom.

In my case i manage to login to the system by editing through grub and putting 
rw instead of ro and init=/bin/bash
When i tried an apt-get upgrade the package initscripts has been kept back. if 
i force install it the system ask me to remove almost all packages (gdm, ubuntu 
desktop, etc)

The worst is that i can get to connect to the net so i have no idea how
am i going to fix that system failure.

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karmic boot hung after /scripts/init-bottom
https://bugs.launchpad.net/bugs/430272
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