For me I have a similar problem.  gutsy qemu won't successfully the
gusty desktop i386 livecd (ubuntu-7.10-desktop-i386.iso).  But I don't
get an error displayed before it drops into busybox.

Commandline:
qemu -cdrom /media/Nano/ubuntu-7.10-desktop-i386.iso -m 512 -boot d

If it's any assistance, here is my casper.log from the vm.

+ PREREQ=
+ . /scripts/casper-functions
+ . /scripts/functions
+ prereqs
+ echo
+ exit 0
+ PREREQ=
+ . /scripts/casper-functions
+ . /scripts/functions
+ . /scripts/lupin-helpers
+ . /scripts/casper-helpers
+ [ Ubuntu = Ubuntu ]
+ MP_QUIET=-Q
+ [ ! -x /bin/fstype ]
+ iso_path=
+ cat /proc/cmdline
+ [  ]
Unable to find a medium containing a live filesystem

-- 
Gutsy Beta's ISO does not boot in QEMU
https://bugs.launchpad.net/bugs/147535
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Bugs, which is the bug contact for Ubuntu.

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