I also encountered the same symptoms when initially attempting to upgrade from v2.4 to v2.5 and subsequently when attempting a clean install on 12.04 ubuntu.
What did work on a clean install was NOT creating the sdn user during initial setup of ubuntu. Instead, use ubuntu/ubuntu (or something other than sdn/password) to install Linux. After successfully installing Linux, login to the ubuntu account to unpack and install the HP SDN Controller software.
This allows the installation process to create the sdn user with the correct attributes and permissions.