I had Ubuntu 7.10, also with a snapshot. When trying to upgrade to Ubuntu 8.04 
beta, the same dialog came up telling me that snapshots will be lost. I'm not 
certain whether I pressed OK or cancel, but update-manager returned the same 
error as above:
virtualbox returned exit status 1

Later in the install, a message box tell me:
package virtualbox-ose is already installed and configured

Also:
virtualbox-ose failed to install or upgrade
update-manager failed to install or upgrade

Afterwards, after the generation of initrd, an error is displayed in the
console that my system could be in a unusable state, update-manager is
trying to run 'dpkg -a'. Then update-manager closes unexpectedly.

All other packages seemed to work in the upgrade to Hardy.

-- 
virtualbox cannot update when upgrading from 7.10 to 8.04 beta
https://bugs.launchpad.net/bugs/204611
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