given my previous comment, i would have suspected that there was disk or kernel 
failure.
however, ssh-keyscan seemed to indicate ssh was running:
$ ssh-keyscan us-west-1.cloudapp.net 
# us-west-1.cloudapp.net SSH-2.0-OpenSSH_6.1p1 Debian-4
Connection closed by 137.135.115.232

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https://bugs.launchpad.net/bugs/1195524

Title:
  race condition / transient failure to provision

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