I can confirm the fix in comment #4 worked for me as well.

I had a 12.04.5 system running with Full Disk Encryption (from initial
install). After upgrading to 14.04.1 and rebooting, the luks encrypted
root file system could not be unlocked. The system would prompt for the
password, but then throw a bunch of errors, with the most notable
"/sbin/cryptsetup not found".

I then booted off the 12.05.5 install media (14.04.1 would could not
properly unlock the luks encrypted file systems) and created the
/usr/share/initramfs-tools/conf-hooks.d/forcecryptsetup as described in
comment #4, updated the initrd, and rebooted. I was then prompted for
the password, which was accepted and opened the root file system.

All is good again after upgrading!

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https://bugs.launchpad.net/bugs/1256730

Title:
  /usr/share/initramfs-toos/hooks/cryptroot does not honour the
  CRYPTSETUP variable

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