Perhaps you could give some more information on what you did.
I just did this, and was unable to reproduce:
$ euca-run-instances ami-057bcf6c --instance-type m1.small --key brickies
$ ssh ubuntu@$HOSTNAME

% sudo apt-get update
% sudo apt-get upgrade
% sudo reboot

# note, In an attempt to guarantee a way in, I first added another user
and set up ssh keys for that user, but then went in with the ubuntu
user.

I then went back in and did:
 % sudo apt-get dist-upgrade

and everything was fine.

Please provide the instance type you were running with and anything you
did between launch and reboot.

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https://bugs.launchpad.net/bugs/1058517

Title:
  Upon Restart after Upgrading Apt Packages SSH Keyfiles Rejected

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