This bug was fixed in the package cloud-init - 0.7.6~bzr1020-0ubuntu1

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cloud-init (0.7.6~bzr1020-0ubuntu1) utopic; urgency=medium

  [ Ben Howard ]
  * Fix for cloud-init misidentifying grub install device (LP: #1336855).

  [ Scott Moser ]
  * New upstream snapshot.
    * cc_grub_dpkg: consider /dev/xvda as candidate for grub installation
      (LP: #1336855)
    * resizefs: fix backgrounding of resizefs (LP: #1338614)
    * cloud-init-blocknet: remove debug code
 -- Scott Moser <smo...@ubuntu.com>   Tue, 23 Sep 2014 14:20:09 -0400

** Changed in: cloud-init (Ubuntu Utopic)
       Status: In Progress => Fix Released

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https://bugs.launchpad.net/bugs/1336855

Title:
  [SRU] non-interactive grub updates broken for /dev/xvda devices on
  Cloud-Images/Cloud-init

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