When running a large number of VMs with a lot of RAM on a Linux system, say 20 VMs with 1 GB of RAM each, additional VMs might fail to start with a kernel error saying that the vmalloc pool is exhausted and should be extended. The error message also tells you to specify vmalloc=256MB in your kernel parameter list. If adding this parameter to your GRUB or LILO configuration makes the kernel fail to boot, with an error message such as failed to mount the root partition, then you have probably run into a memory conflict of your kernel and initial RAM disk. This can be solved by adding the following parameter to your GRUB configuration:

uppermem 524288