I've just uploaded this to zesty and to xenial-proposed.
The changes can be seen
  
https://git.launchpad.net/cloud-init/commit/?id=9e904bbc3336b96475bfd00fb3bf1262ae4de49f

There was also a change made to packaging so that on upgrade we will update 
/etc/fstab
on the ephemeral disk to include 
  x-systemd.requires=cloud-init.service,comment=cloudconfig

This fixes the upgrade, then resize case.
That change can be seen at 
  
https://git.launchpad.net/cloud-init/commit/?h=ubuntu/devel&id=fac7c5c3b5758c03b3df40ce25849c73de1a8140

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https://bugs.launchpad.net/bugs/1611074

Title:
  Reformatting of ephemeral drive fails on resize of Azure VM

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