>You say you updated from 1.2.11 (from a ppa version) - could you tell us which 
>ppa that came from?
This PPA: ppa:jacob/virtualisation

>Does /dev/vhost-net exist? If not, does 'modprobe vhost_net' solve this 
>problem?
No, it doesn't exist. Yes, 'modprobe vhost_net' solve this. But VM still fails 
to start with the same message.

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https://bugs.launchpad.net/bugs/1419564

Title:
  VM fails to start: Launch helper exited with unknown return code 1

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