this is a serious problem and very easy to reproduce:
on an openvz host try to install one of the ubuntu templates from here: 
http://wiki.openvz.org/Download/template/precreated
i tried with ubuntu-9.10-x86.tar.gz and ubuntu-9.04-i386-minimal.tar.gz

when you change the /etc/apt/sources.list to the next distribution and
perform an apt-get update && apt-get dist-upgrade the container will
hang on next reboot with this error:

# vzctl enter 1234
enter into VE 1234 failed
Unable to open pty: No such file or directory

the dist-upgrade to ubuntu 9.10 was working again after inserting the
script from Stéphane Graber, but not anymore with the dist-upgrade to
ubuntu 10.04.

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OpenVZ kernel out of date, karmic requires 2.6.27
https://bugs.launchpad.net/bugs/436130
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