Installing KVM in Ubuntu 7.10 (Gutsy Gibbon)

First, Install kvm and qemu:

sudo apt-get install qemu kvm
sudo modprobe kvm-intel (for Intel processors)
or
sudo modprobe kvm-amd (for AMD processors)

Create image which will contain the OS:

qemu-img create os_image.img -f qcow2 6G

Do OS installation:

kvm -m 512 -cdrom /home/user/other_os.iso -boot d os_image.img

To run the OS:

kvm -no-acpi -m 512 -localtime -cdrom /dev/cdrom os_image.img

SOURCE:
http://www.michaeldolan.com/1030
http://www.howtoforge.com/using-kvm-on-ubuntu-gutsy-gibbon