Comment 5 for bug 92928

Then it should be related to upstart. Make sure you're using the latest version.
Try modifying /etc/event.d/tty*. First, try removing the "respawn" line. That should help to get tty's working, but no respawn.
According to https://launchpad.net/upstart/main/0.3.7, the "respawn" stanza should be declared after "exec". I'm not sure if that makes a difference, but you could try it. (I tried it in casper, but it didn't work).