This bug was fixed in the package systemd - 232-21ubuntu3

---------------
systemd (232-21ubuntu3) zesty; urgency=medium

  [ Martin Pitt ]
  * resolved: Disable DNSSEC by default on stretch and zesty.
    Both Debian stretch and Ubuntu zesty are close to releasing, switch to
    DNSSEC=off by default for those. Users can still turn it back on with
    DNSSEC=allow-downgrade (or even "yes"). (LP: #1682499)

  [ Michael Biebl ]
  * journal: fix up syslog facility when forwarding native messages.
    Native journal messages (_TRANSPORT=journal) typically don't have a
    syslog facility attached to it. As a result when forwarding the
    messages to syslog they ended up with facility 0 (LOG_KERN).
    Apply syslog_fixup_facility() so we use LOG_USER instead. (Closes: #837893)
    (LP: #1682484)

  [ Dimitri John Ledkov ]
  * networkd: cherry-pick support for setting bridge port's priority.
    This is a useful feature/bugfix to improve feature parity of networkd with
    ifupdown. This matches netplan's expectations to be able to set bridge 
port's
    priorities via networked. This featue is to be used by 
netplan/MAAS/OpenStack.
    (LP: #1668347)
  * TEST-12: cherry-pick upstream fix for compat with new netcat-openbsd.
    (LP: #1672542)
  * udev.postinst: preserve virtio interfaces names on upgrades, on s390x.
    New udev generates stable interface names on s390x kvm instances, however, 
upon
    upgrades existing ethX names should be preserved to prevent breaking 
networking
    and software configurations. (Closes: #860246) (LP: #1682437)

 -- Dimitri John Ledkov <x...@ubuntu.com>  Thu, 13 Apr 2017 18:10:33
+0100

** Changed in: systemd (Ubuntu Zesty)
       Status: Fix Committed => Fix Released

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https://bugs.launchpad.net/bugs/1682437

Title:
  udev does not preserve virtio interface names on s390x upgrades

Status in Release Notes for Ubuntu:
  Fix Released
Status in systemd package in Ubuntu:
  Fix Committed
Status in systemd source package in Zesty:
  Fix Released

Bug description:
  [Impact]

   * Upgrading s390x, kvm/qemu instances from yakkety to zesty results in a 
change of network interface names (e.g. from eth0 to stable/predictable bus_id 
name enc3, just like on z/VM and LPAR).
   * This obviously results in loss of network connectivity as 
/etc/network/interfaces no longer matches the network interface names 
configured by systemd.
   * The proposal is to generate udev rules on upgrade to preserve active 
interface names, in a very similar fashion to the no longer in use 
net-persistent-name generator.

  [Test Case]

   * Install zesty from scratch in kvm/qemu, network interfaces should use enc* 
names.
   * Install yakkety, upgrade to zesty, network intefaces should use eth* names 
after upgrade and reboot.

  [Regression Potential]

   * This solution is similar to previous upgrades to stable networking
  names for other types of network interfaces. This will make upgraded
  systems look different from freshly installed systems. For users
  aiming to have homogenious environments it is recommended to remove
  /etc/udev/rules.d/70-persistent-net.rules and readjust
  networking/daemon/firewall configurations to the new stable names
  enc*.

  [Other Info]
   
   * Original bug report filed in debian.

  Package: udev
  Version: 232-20
  Severity: important

  Dear Maintainer,

  systemd 232-20 introduce the patch to generate stable interface names
  for virtio network interfaces on s390x. This is a good thing, and
  those names should be used for new installations.

  However, when upgrading existing virtual machines installations the
  new udev causes interfaces to be renamed from eth0 -> enc1 thus
  breaking networking configuration and possibly other configs
  (e.g. daemons, firewalls etc).

  Therefore on upgrade (but not clean installs) something like
  persistent net rules should be generated to preserve ethX interface
  names and thus not break networking configuration.

  I will attach a proposed patch to achieve this shortly for review.

  It is important to fix this in stretch such that upgrades to stretch
  are flawless.

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