Description of problem: Currently Nova extends only raw disk images and can on deal with resizing partitions of type ext2/3/4 (or unpartitioned space). If we utilize virt-resize from libguestfs we can handle resizing VGs/LVM and other types of filesystems. virt-resize also does better error checking to make sure the operation succeeded.
looking in folsom - it seems like qcow2 and raw images get extended - but unless we have an initramfs doing a growroot then it won't work w/o a reboot of the instance.
Upstream are leaning towards (newer) cloud-init doing this within the image, rather than externally with virt-resize.
For more concrete details on using cloud-utils to auto resize from within the guest on boot, see: http://lists.openstack.org/pipermail/openstack-operators/2013-June/003131.html