I've verified this with is good with.
$ dpkg-query --show cloud-init
cloud-init      0.7.8-1-g3705bb5-0ubuntu1~16.04.1

** Description changed:

  ==== Begin SRU Template ====
  Instances of ubuntu launched on Rackspace public cloud would have broken 
networking and WARN messages in /var/log/cloud-init.log.
  With this new cloud-init in place, any vms launched with a config drive
  would not work properly.
  [Test Case]
  Show failure
   * create a vm on rackspace. using image ba8782e1-ec35-4bdc-b8f7-2f28e343094a
     openstack server create --config-drive=1 --key-name=brickies --flavor=2 
--image=ba8782e1-ec35-4bdc-b8f7-2f28e343094a  my-xenial-cfgdrv
   * ssh will fail to system. go to rackspace cloud console, view the
  servers' console and log in as root via password provided.
  Now, to fix:
   * log into system on console
   * get the proposed package:
     echo "deb http://archive.ubuntu.com/ubuntu $(lsb_release -sc)-proposed 
main" | tee /etc/apt/sources.list.d/proposed.list
     apt-get update
     apt-get install cloud-init
+    mkdir orig
+    mv /var/lib/cloud /var/log/cloud-init* orig
   * reboot
  You should now be able to ssh into the system.
  [Regression Potential]
  Low regression potential, as this is a fix for a regression.
  It could potentially have fallout on other openstack cloud guests, but only 
in cases where there was already failure.
  ==== End SRU Template ====
  NOTE: this was originally reported in cpc-rax bug 1621968.  Re-reporting
  here for tracking purposes as requested.  Please see that issue for log
  files and more details.
  In recent versions of cloud-init[1], we've found that when we attach a
  configdrive to a cloud server cloud-init crashes before it has a chance
  to complete its tasks - most critically, generating the SSH keys.
  The root of this issue seems to be that cloud-init wants to parse the
  included network config on the configdrive.. Our network config uses a
  "null" vif type, which causes cloud-init to bomb out with an error like
  Sep 09 14:48:40 shtest2 cloud-init[2910]: ValueError: Unknown
  network_data link type: None
  [1]# dpkg -s cloud-init | grep ^Version
  Version: 0.7.7~bzr1256-0ubuntu1~16.04.1

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  cloud-init in xenial crashes on "null" vif type in network_data.json

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