Same problem here
# xm top 
Shows 100% cpu load on the DomU

DomU Console in Gutsy with  2.6.22-14-xen:
  * Setting preliminary keymap...                                         [ OK ]
  * Setting the system clock

The problem occurs with  2.6.22-13-xen & 2.6.22-14-xen,  kernel
2.6.22-12-xen however boots.

DomU Console in Gutsy with 2.6.22-12-xen:
 * Setting preliminary keymap...                                         [ OK ]
 * Setting the system clock
 * Unable to set System Clock to: Mon Nov 26 19:38:44 UTC 2007
 * Starting basic networking...                                          [ OK ]
 * Starting kernel event manager...                                      [ OK ]
 * Loading hardware drivers...                                           [ OK ]
... continues
Ubuntu 7.10 myhost xvc0

myhost login:

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