The log contains the phrase:
gzip: stdout: No space left on device
You ran out of space as it was creating the initrd.
** Changed in: linux (Ubuntu)
Status: New => Invalid
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package linux-image-2.6.27-7-generic 2.6.27-7.16 failed to install/upgrade:
subprocess post-installation script returned error exit status 2
https://bugs.launchpad.net/bugs/331698
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