That's normal for 1.5. With the 2.0 image it should also print out some additional lines after "ANDROID" with the network information for the VM assuming it was able to obtain an address from DHCP.
The Android GUI, everything from the boot animation through to the home screen, is "displayed" to the virtual framebuffer where it's picked up by the video streaming code and sent out to a client app. The VGA console of the VM will continue to display only the initial kernel bootup as you've seen, but if you attach a serial port device to the VM you can also get the output from dmesg as well as a shell.