Just seen this with libvirt-0.7.1-12.fc12:

$> virsh save rawhide-20090904 /var/lib/libvirt/images/rawhide-20090904.sav
Domain rawhide-20090904 saved to /var/lib/libvirt/images/rawhide-20090904.sav
$> virsh restore /var/lib/libvirt/images/rawhide-20090904.sav
error: Failed to restore domain from /var/lib/libvirt/images/rawhide-20090904.sav
error: internal error Timed out while reading monitor startup output

from the qemu log file:

sh: /var/lib/libvirt/images/rawhide-20090904.sav: Permission denied
LC_ALL=C PATH=/sbin:/usr/sbin:/bin:/usr/bin QEMU_AUDIO_DRV=none /usr/bin/qemu-kvm -S -M pc-0.11 -m 1024 -smp 1 -name rawhide-20090904 -uuid 137b3e14-9c53-c788-5763-9a16e6fa14c0 -monitor unix:/var/lib/libvirt/qemu/rawhide-20090904.monitor,server,nowait -boot c -drive file=/var/lib/libvirt/images/rawhide-20090904.img,if=virtio,index=0,boot=on,format=raw -net nic,macaddr=52:54:00:51:74:32,vlan=0,model=virtio,name=virtio.0 -net tap,fd=18,vlan=0,name=tap.0 -serial pty -parallel none -usb -usbdevice tablet -vnc 127.0.0.1:0 -k en-gb -vga std -incoming exec:cat 
char device redirected to /dev/pts/7
load of migration failed

selinux:

$> ausearch -m AVC -ts recent
----
time->Fri Oct 16 12:46:46 2009
type=SYSCALL msg=audit(1255693606.288:89): arch=c000003e syscall=59 success=yes exit=0 a0=7f56dc09f410 a1=7f56dc007350 a2=7f56dc006fb0 a3=7f56e88ded50 items=0 ppid=1 pid=15632 auid=0 uid=107 gid=107 euid=107 suid=107 fsuid=107 egid=107 sgid=107 fsgid=107 tty=(none) ses=6 comm="qemu-kvm" exe="/usr/bin/qemu-kvm" subj=system_u:system_r:svirt_t:s0:c58,c912 key=(null)
type=AVC msg=audit(1255693606.288:89): avc:  denied  { read } for  pid=15632 comm="qemu-kvm" path="/var/lib/libvirt/images/rawhide-20090904.sav" dev=dm-0 ino=3466530 scontext=system_u:system_r:svirt_t:s0:c58,c912 tcontext=unconfined_u:object_r:virt_image_t:s0 tclass=file

Are we not re-labelling the save file before attempting to restore from it?