I experienced the same problem after upgrading 7.04 to 7.10. I solved
this problem by booting with 2.6.20 and deleting /boot/grub/menu.lst.
After that, i ran update-grub and asked it to build a new menu.lst,
which it did. The difference between the old and the new menu.lst is,
that the one does no longer use root=UUID=... but instead uses
root=/dev/mapper/sda5.

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gutsy can not mount root filesystem (device or resource busy)
https://bugs.launchpad.net/bugs/137180
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