Update: This can be reproduced without the use of vmbuilder.

I have not as yet tracked down which command run by debootsrap causes
the problem.

Running the following commands reproduce the same behaviour:

 mkdir /test-root
 debootstrap --arch=amd64 jaunty /test-root http://archive.ubuntu.com/ubuntu

-- 
building vm image on text console causes gettys to stop respawning
https://bugs.launchpad.net/bugs/392377
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