Thanks for your report.
The relevant error is
---
Processing triggers for initramfs-tools ...
update-initramfs: Generating /boot/initrd.img-2.6.32-21-generic
gzip: stdout: No space left on device
update-initramfs: failed for /boot/initrd.img-2.6.32-21-generic
dpkg: error processing initramfs-tools (--configure):
subprocess installed post-installation script returned error exit
status 1
There is no space left in /boot. Please free some space and try again.
Don't hesitate to submit any new bug.
** Changed in: update-manager (Ubuntu)
Status: New => Invalid
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upgrade to lucid fails with could not install upgrades
https://bugs.launchpad.net/bugs/575711
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