I am also observed network freeze.
Used virtio drivers for network and for disk too (for WinXP/Win7 x86 guests),
On every guest shutdown and sometimes on guest start-up network connection (to 
host and to guests) is interrupted from 2 seconds up to 10 seconds (sometimes 
more, it vary).

My case:
Lucid x64 with eucalyptus installed on quad-core Intel CPU (motherboard 'Asus 
P6T SE'), network is bridged.
Running kvm manually as well as using eucalyptus cloud - always same network 
freeze occur.

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kvm images losing connectivity w/bridged network
https://bugs.launchpad.net/bugs/584048
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