I tried and successfully reproduced the issue with single processor in
Hardy 64-bit host and 32-bit guest. [1] Next I tried installation of the
PPA, and couldn't been able to start the VM after that (screenshot
attached). After removing the PPA packages [2] and installing the
original Hardy packages back [3] guest host is able to boot and run. Is
there something I need to do to be able to run the VM with PPA packages?

[1]
eth0      Link encap:Ethernet  HWaddr 52:54:00:92:98:b0  
          inet addr:192.168.1.173  Bcast:192.168.1.255  Mask:255.255.255.0
          inet6 addr: fe80::5054:ff:fe92:98b0/64 Scope:Link
          UP BROADCAST RUNNING MULTICAST  MTU:1500  Metric:1
          RX packets:769793 errors:60 dropped:116 overruns:0 frame:0
          TX packets:715790 errors:0 dropped:0 overruns:0 carrier:0
          collisions:0 txqueuelen:1000 
          RX bytes:773865207 (738.0 MB)  TX bytes:770534040 (734.8 MB)
          Interrupt:11 Base address:0xc100

[2] With PPA enabled removing the packages PPA upgrades:
apt-get remove kvm libvirt-bin libvirt0 python-libvirt

[3] With PPA disabled instaling the original Hardy packages:
apt-get install kvm libvirt-bin libvirt0 python-libvirt python-virtinst 
virt-manager virt-viewer

** Attachment added: "The screenshot of not booting VM with PPA"
   
http://launchpadlibrarian.net/24120112/Screenshot-QEMU%20-%20Virt%20Viewer.png

-- 
Network issues with hardy guests/hosts, using default nic and virtio
https://bugs.launchpad.net/bugs/332156
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