I can confirm this problem in Edgy on x86.  My /etc/crypttab has this
line:

  crypt /dev/hda6

Dapper used to stop during boot and wait for the passphrase.  Edgy does
not.  When I boot without "splash", I can see the failure message:

  Starting early crypto disks...
  Enter passphrase: Command failed: Key reading error

After the system comes up, I can run /etc/init.d/cryptdisks (or
cryptdisks-early) by hand and it works fine; it waits for the passphrase
and starts the encrypted device.

-- 
cryptdisks-early and crypdisks scripts don't wait for password
https://launchpad.net/bugs/66577

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