This same behavior is happening for me with 9.04 hosts and vms. Using
hardware acceleration on an AMD dual core processor. I had one running
over the weekend that started doing this, and I can confirm that the VM
doesn't completely hang, it just shoots to 100% CPU (in my case 100% of
the one core it's allowed to use) and continues very very slowly
(presumably with 120 second timeout for every operation). It does dump
error messages to the console, but I neglected to record them before
killing the instance. The first VM on the system has been running the
whole time with no issues, only the second and third (which are running
the same software) are having issues.

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kvm hangs on AMD
https://bugs.launchpad.net/bugs/380650
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