Log exception details setting vm_state to error

This commit switches to LOG.exception() for exceptions that trigger
setting an instance into an error vm_state. Prior to this commit just
an error message was printed which provided no context for debugging
an actual failure. By switching to LOG.exception() instead of
LOG.error() a traceback will be printed to show where the exception
came from.

Fixes bug 1215068

Change-Id: If3aaf3d8ec61c3e902c299f3e5889dcafa144a9a
Merge "Log exception details setting vm_state to error"