Works for me on an Intrepid system.
Looks like the usage of uname since version 3.4-1 fixes this bug:
kernel = /boot/vmlinuz-`uname -r`
initrd = /boot/initrd.img-`uname -r`
** Changed in: xen-tools (Ubuntu)
Status: Confirmed => Fix Released
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Xen-Tools installs with incorrect kernel config in Feisty
https://bugs.launchpad.net/bugs/119121
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