Got exactly the same issue on a rather oldish Sony Vaio PCG-Z600 TEK.

I found the following workaround and successfully installed Linux Mint 8
LXDE Community Edition (which ist based on Ubuntu Karmic, so I guess
this also applies there):

The Laptop has got a pcmcia CD-ROM it can boot from, but after having
chosen the option to start the live CD in the GRUB menu, it hangs after
a couple of seconds printing the message

"/init: line 1: can't open /dev/sdb: No medium found"
(initramfs) Unable to find a medium containing a live file system

I then created a bootable USB Pen-Drive using the same Mint 8 LXDE iso I
burnt to the CD before. I used Ubuntu's usb-creator application to do
that. I then opened the BIOS setup of my vaio just to find out that it
can't boot from usb-drives. I tried nonetheless, but it didn't work.

Thinking about the line "Unable to find a medium containing a live file
system", I thought: Hey, if he (the laptop, mine is male) can't *find*
one, at least he's *searching*, right? So I popped in the usb drive
again, rebooted from the CD and waited to see if he would find the "live
file system" on the usb drive. And, ta-dah, he did! Booted up the live
system just fine and performed the hd-install from there. Needless to
say, it was incredibly slow (Pentium 3...@700mhz and 512 MB RAM), but it
worked!

Now that it runs off the hd it's speedy for every day surfing / mailing
etc.

Not a solution, but a very easy workaround. Hope this helps.

Cheers, 
Phil

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Karmic Koala Beta does not install on Sony Vaio
https://bugs.launchpad.net/bugs/454158
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