I just hit this on Ubuntu 12.10 running trunk nova to try and spin up nested kvm VMs:

# virsh capabilities
<capabilities>

  <host>
    <uuid>3d39c1b1-7f6a-5536-de6e-c450da2036c8</uuid>
    <cpu>
      <arch>i686</arch>
      <model>qemu32</model>
      <vendor>Intel</vendor>
      <topology sockets='1' cores='1' threads='1'/>
      <feature name='hypervisor'/>
      <feature name='popcnt'/>
    </cpu>
    <power_management>
      <suspend_mem/>
      <suspend_disk/>
      <suspend_hybrid/>
    </power_management>
    <migration_features>
      <live/>
      <uri_transports>
        <uri_transport>tcp</uri_transport>
      </uri_transports>
    </migration_features>
    <secmodel>
      <model>apparmor</model>
      <doi>0</doi>
    </secmodel>
  </host>

  <guest>
    <os_type>hvm</os_type>
    <arch name='i686'>
      <wordsize>32</wordsize>
      <emulator>/usr/bin/qemu-system-x86_64</emulator>
      <machine>pc-1.2</machine>
      <machine>none</machine>
      <machine canonical='pc-1.2'>pc</machine>
      <machine>pc-1.1</machine>
      <machine>pc-1.0</machine>
      <machine>pc-0.15</machine>
      <machine>pc-0.14</machine>
      <machine>pc-0.13</machine>
      <machine>pc-0.12</machine>
      <machine>pc-0.11</machine>
      <machine>pc-0.10</machine>
      <machine>isapc</machine>
      <domain type='qemu'>
      </domain>
    </arch>
    <features>
      <cpuselection/>
      <deviceboot/>
      <pae/>
      <nonpae/>
      <acpi default='on' toggle='yes'/>
      <apic default='on' toggle='no'/>
    </features>
  </guest>

  <guest>
    <os_type>hvm</os_type>
    <arch name='x86_64'>
      <wordsize>64</wordsize>
      <emulator>/usr/bin/qemu-system-x86_64</emulator>
      <machine>pc-1.2</machine>
      <machine>none</machine>
      <machine canonical='pc-1.2'>pc</machine>
      <machine>pc-1.1</machine>
      <machine>pc-1.0</machine>
      <machine>pc-0.15</machine>
      <machine>pc-0.14</machine>
      <machine>pc-0.13</machine>
      <machine>pc-0.12</machine>
      <machine>pc-0.11</machine>
      <machine>pc-0.10</machine>
      <machine>isapc</machine>
      <domain type='qemu'>
      </domain>
    </arch>
    <features>
      <cpuselection/>
      <deviceboot/>
      <acpi default='on' toggle='yes'/>
      <apic default='on' toggle='no'/>
    </features>
  </guest>

</capabilities>


2013-05-30 17:19:06,688.688 18123 ERROR nova.compute.manager [req-a6ee869a-1875-4dd1-a832-1311cf208239 8a4a185b7a9f4256
92145162eef5a8da c82b41ffcf5e4d63bce6d2520b26dbf1] [instance: fd55b74c-48b3-43ee-ad24-f20efaeb2b88] Error: ['Traceback 
(most recent call last):\n', '  File "/opt/stack/venvs/nova/local/lib/python2.7/site-packages/nova/compute/manager.py",
 line 949, in _build_instance\n    set_access_ip=set_access_ip)\n', '  File "/opt/stack/venvs/nova/local/lib/python2.7/
site-packages/nova/compute/manager.py", line 1154, in _spawn\n    LOG.exception(_(\'Instance failed to spawn\'), instan
ce=instance)\n', '  File "/usr/lib/python2.7/contextlib.py", line 24, in __exit__\n    self.gen.next()\n', '  File "/op
t/stack/venvs/nova/local/lib/python2.7/site-packages/nova/compute/manager.py", line 1150, in _spawn\n    block_device_i
nfo)\n', '  File "/opt/stack/venvs/nova/local/lib/python2.7/site-packages/nova/virt/libvirt/driver.py", line 1534, in s
pawn\n    block_device_info)\n', '  File "/opt/stack/venvs/nova/local/lib/python2.7/site-packages/nova/virt/libvirt/driver.py", line 2451, in _create_domain_and_network\n    domain = self._create_domain(xml, instance=instance)\n', '  File "/opt/stack/venvs/nova/local/lib/python2.7/site-packages/nova/virt/libvirt/driver.py", line 2411, in _create_domain\n    domain = self._conn.defineXML(xml)\n', '  File "/usr/lib/python2.7/dist-packages/eventlet/tpool.py", line 187, in doit\n    result = proxy_call(self._autowrap, f, *args, **kwargs)\n', '  File "/usr/lib/python2.7/dist-packages/eventlet/tpool.py", line 147, in proxy_call\n    rv = execute(f,*args,**kwargs)\n', '  File "/usr/lib/python2.7/dist-packages/eventlet/tpool.py", line 76, in tworker\n    rv = meth(*args,**kwargs)\n', '  File "/usr/lib/python2.7/dist-packages/libvirt.py", line 2539, in defineXML\n    if ret is None:raise libvirtError(\'virDomainDefineXML() failed\', conn=self)\n', "libvirtError: internal error no supported architecture for os type 'hvm'\n"]