To me it seems that cryptsetup has two startup scripts (in /etc/init.d):

cryptdisks-early
cryptdisks

AFAIK both read /etc/crypttab and cryptdisks-early reads the 1st line
(probably what's needed to boot) and cryptdisks reads the remaining lines.
For some reason upstart doesn't wait for the entry of passwords at the
prompt of cryptdisks.

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cryptsetup prompt is overriden by upstart and xsplash in Karmic
https://bugs.launchpad.net/bugs/434232
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