the problem is very strange to be. i tested it in 2 kernels 2.6.31-14-generic and 2.6.34-rc3 (from kvm git) below are the scenarios.
i did not find problem with 2.6.31-14-generic (but there might be problem with newer ubuntu shipped kernel but i haven't updated them because i use kvm git)
-no-kvm does not seem to have any effect (i also tried manually removing kvm-intel and kvm modules). so does not look like the problem with kernel modules.
running as normal user and sudo does not have problems
running as -nodisplay or in vnc does not have any problems.
only running as root with sdl seems to be problematic.
if someone else can conform this. that would be great. let me know if you need any log files. i did not see any hints in log files. may be i am looking at wrong place.