I ran into the same problem and could not find a resolution online. I was able to get this resolved though although unsure which steps (or combination of) fixed it.
Here's the error:
Failed to set upstart as init: No such file or directory
Here's what I did which resolved it:
1) Revert back to vzctl 3.0.29.3-1 (hxxp://wiki.solusvm.com/index.php/OpenVZ_Bugs) **Possibly not required? I never tried vzctl umount prior to the revert but only found out after trying vzctl destroy which provided an error that the VPS was mounted.**
2) vzctl umount <VZID>
3) vzctl start <VZID>
[Updated on: Sun, 04 March 2012 09:44]
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