I just re-installed my slice with Ubuntu 0.04 1 LTS (hardy), then did :
* cap machine:initial_setup
* cap machine:configure
* cap machine:install_dev_tools
I've set a password when prompted (password was *not* left blank) :
* for the root user
* for the new user
* for the MySQL root user
I'm using Ubuntu Machine 0.3.1.1.
Please let me know if you still have the problem.
Best,
Thomas.