(Marking this confirmed as it has been seen by at least 3 people)

Note that to easily reproduce,

   lxc-create -t ubuntu-cloud -n cloud1
   lxc-start -n cloud1
   (login as ubuntu/ubuntu)
      sudo apt-get update && sudo apt-get dist-upgrade # assuming linux-image 
is slated to be updated.

** Changed in: grub2 (Ubuntu)
   Importance: Undecided => High

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https://bugs.launchpad.net/bugs/1060404

Title:
  update-grub runs and fails in containers

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