It seems that the problem is the /lib/udev/set_hwclock script; it calls
hwclock, even when HWCLOCKACCESS is set to 'no' in /etc/default/rcS
(which is obeyed by the /etc/init.d/hwclockfirst.sh script). I tried
turning off all the 'x' bits on /lib/udev/set_hwclock, and then a Xen
domU running gutsy boots fine. Perhaps someone should just check
$HWCLOCKACCESS in the script, as is done in hwclockfirst.sh?

-- 
xen guest hangs after mounting filesystem
https://bugs.launchpad.net/bugs/144631
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