Same issue here.

cloud-init.log

Apr 26 00:25:33  [CLOUDINIT] util.py[DEBUG]: Cloud-init v. 0.7.8 running 'init-local' at Wed, 26 Apr 2017 00:25:33 +0000. Up 6.65 seconds.
Apr 26 00:25:33  [CLOUDINIT] util.py[DEBUG]: Writing to /var/log/cloud-init.log - ab: [420] 0 bytes
Apr 26 00:25:33  [CLOUDINIT] util.py[DEBUG]: Changing the ownership of /var/log/cloud-init.log to 104:4
Apr 26 00:25:33  [CLOUDINIT] util.py[DEBUG]: Attempting to remove /var/lib/cloud/instance/boot-finished
Apr 26 00:25:33  [CLOUDINIT] util.py[DEBUG]: Attempting to remove /var/lib/cloud/data/no-net
Apr 26 00:25:33  [CLOUDINIT] handlers.py[DEBUG]: start: init-local/check-cache: attempting to read from cache [check]
Apr 26 00:25:33  [CLOUDINIT] util.py[DEBUG]: Reading from /var/lib/cloud/instance/obj.pkl (quiet=False)
Apr 26 00:25:33  [CLOUDINIT] stages.py[DEBUG]: no cache found
Apr 26 00:25:33  [CLOUDINIT] handlers.py[DEBUG]: finish: init-local/check-cache: SUCCESS: no cache found
Apr 26 00:25:33  [CLOUDINIT] util.py[DEBUG]: Attempting to remove /var/lib/cloud/instance
Apr 26 00:25:33  [CLOUDINIT] util.py[WARNING]: failed stage init-local
Apr 26 00:25:33  [CLOUDINIT] util.py[DEBUG]: failed stage init-local#012Traceback (most recent call last):#012  File "/usr/lib/python3/dist-packages/cloudinit/cmd/main.py", line 521, in status_wrapper#012    ret = functor(name, args)#012  File "/usr/lib/python3/dist-packages/cloudinit/cmd/main.py", line 247, in main_init#012    init.fetch(existing=existing)#012  File "/usr/lib/python3/dist-packages/cloudinit/stages.py", line 358, in fetch#012    return self._get_data_source(existing=existing)#012  File "/usr/lib/python3/dist-packages/cloudinit/stages.py", line 259, in _get_data_source#012    util.del_file(self.paths.instance_link)#012  File "/usr/lib/python3/dist-packages/cloudinit/util.py", line 1660, in del_file#012    raise e#012  File "/usr/lib/python3/dist-packages/cloudinit/util.py", line 1657, in del_file#012    os.unlink(path)#012IsADirectoryError: [Errno 21] Is a directory: '/var/lib/cloud/instance'
Apr 26 00:25:33  [CLOUDINIT] util.py[DEBUG]: Reading from /proc/uptime (quiet=False)
Apr 26 00:25:33  [CLOUDINIT] util.py[DEBUG]: Read 10 bytes from /proc/uptime
Apr 26 00:25:33  [CLOUDINIT] util.py[DEBUG]: cloud-init mode 'init' took 0.084 seconds (0.08)
Apr 26 00:25:33  [CLOUDINIT] handlers.py[DEBUG]: finish: init-local: SUCCESS: searching for local datasources


cloud-init-output.log

------------------------------------------------------------
Cloud-init v. 0.7.8 running 'init-local' at Wed, 26 Apr 2017 00:25:33 +0000. Up 6.65 seconds.
2017-04-26 00:25:33,158 - util.py[WARNING]: failed stage init-local
failed run of stage init-local
------------------------------------------------------------
Traceback (most recent call last):
  File "/usr/lib/python3/dist-packages/cloudinit/cmd/main.py", line 521, in status_wrapper
    ret = functor(name, args)
  File "/usr/lib/python3/dist-packages/cloudinit/cmd/main.py", line 247, in main_init
    init.fetch(existing=existing)
  File "/usr/lib/python3/dist-packages/cloudinit/stages.py", line 358, in fetch
    return self._get_data_source(existing=existing)
  File "/usr/lib/python3/dist-packages/cloudinit/stages.py", line 259, in _get_data_source
    util.del_file(self.paths.instance_link)
  File "/usr/lib/python3/dist-packages/cloudinit/util.py", line 1660, in del_file
    raise e
  File "/usr/lib/python3/dist-packages/cloudinit/util.py", line 1657, in del_file
    os.unlink(path)
IsADirectoryError: [Errno 21] Is a directory: '/var/lib/cloud/instance'
------------------------------------------------------------