Seems this is a fedora 15 kernel problem. It seems to happen only in the jump to 2.6.40, which I "yum updated" to yesterday.https://bugzilla.redhat.com/show_bug.cgi?id=728379
In the interim kvm/qemu seems to be running fine, and does have vnc as a bonus.
Note vnc to fedora kvm has a strange keyboard repeat problem which means sometimes you get autorepeat that needs to be cancelled by pressing another key. I suspect this is a problem related to the java vnc client I provide. However I suggest putting up with the problem or switching autorepeat off in your virtual machine. Telnet and SSH is unaffected.