I am having the same problem on an HP DL385 system. The 2.6.16 xen kernel package works (although it is misnamed, and should probably have a convenience package to fix the naming conventions).
xen-image-xen0-2.6.16-11.2-generic works
xen-image-xen0-2.6.17-6-generic-xen0 hangs as described above (though always after the four CPUs have been reported, the progress after seems inconsistent with each reboot. It never appears to make it to init.)
I am having the same problem on an HP DL385 system. The 2.6.16 xen kernel package works (although it is misnamed, and should probably have a convenience package to fix the naming conventions).
xen-image- xen0-2. 6.16-11. 2-generic works
xen-image- xen0-2. 6.17-6- generic- xen0 hangs as described above (though always after the four CPUs have been reported, the progress after seems inconsistent with each reboot. It never appears to make it to init.)