The hostname is usually set by the config_drive.  You have to set
"force_config_drive = always" in /etc/nova/nova.conf.  I have tried this
with the latest devstack and using the ubuntu cloud image.

** Changed in: nova
       Status: Confirmed => Invalid

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https://bugs.launchpad.net/bugs/1291617

Title:
  guest vm hostname is not set to the instance name

Status in OpenStack Compute (Nova):
  Invalid

Bug description:
  Create a new VM with a name like "testvm1" with the  default cirros image
  Wait for it to be acitve and SSH able.
  ssh to the guest VM just created.
  check the hostname - it is "cirros" instead of the expected hostname "testvm1"

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