gizmo: change your file: to tap:aio (for your disk entries and it will
boot.

Also, you will probably run into the network bug see:
https://bugs.launchpad.net/ubuntu/+source/xen-3.2/+bug/204010
https://bugs.launchpad.net/ubuntu/+source/linux/+bug/218126

The workarounds are described in detail:
http://howtoforge.com/ubuntu-8.04-server-install-xen-from-ubuntu-repositories
http://deshantm.livejournal.com/29959.html

-- 
Device 0 (vif) could not be connected. Hotplug scripts not working.
https://bugs.launchpad.net/bugs/199533
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