Using the mainline kernel fixed the problem.  I immediately saw the
password screen.

$ uname -r
3.4.0-030400rc3-generic
$ uname -a
Linux pc06 3.4.0-030400rc3-generic #201204152235 SMP Mon Apr 16 02:36:13 UTC 
2012 x86_64 x86_64 x86_64 GNU/Linux
$ dpkg -s linux-image-3.4.0-030400rc3-generic
Package: linux-image-3.4.0-030400rc3-generic
Status: install ok installed
Priority: optional
Section: kernel
Installed-Size: 150716
Maintainer: Ubuntu Kernel Team <[email protected]>
Architecture: amd64
Source: linux
Version: 3.4.0-030400rc3.201204152235


** Changed in: linux (Ubuntu)
       Status: Incomplete => Confirmed

** Tags removed: needs-upstream-testing
** Tags added: kernel-fixed-upstream

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https://bugs.launchpad.net/bugs/966403

Title:
  Lubuntu Install (entire disk with encryption) doesn't prompt for disk
  password.

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