Let me re-emphasize the last comment from jrigling:
"apt-get install qemu-kvm" solves the problem in karmic for me. It uninstalls "kvm" and "qemu" packages from jaunty and installs the new "qemu-kvm" package from karmic. Problem gone.
This is more likely an installer / upgrade bug than a kernel bug in karmic.
Let me re-emphasize the last comment from jrigling:
"apt-get install qemu-kvm" solves the problem in karmic for me. It uninstalls "kvm" and "qemu" packages from jaunty and installs the new "qemu-kvm" package from karmic. Problem gone.
This is more likely an installer / upgrade bug than a kernel bug in karmic.