Does your /etc/network/interfaces file contain the following lines?

  auto lo
  iface lo inet loopback

I have two machines where this workaround is actually working. (But your
experience may tell that my hints are in the wrong direction)

Anyway, I agree this bug is in fact critical, and my suggestion is to
revert back to the previous version of upstart until the problem is
further investigated. What was the intended benefit of this upgrade
again?

-- 
upstart not starting init-scripts (event net-device-up IFACE=lo missing)
https://bugs.launchpad.net/bugs/497299
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