Are you using 64 bit AMD/Intel EM64T based kernel? Many servers have problem to boot 64bit SMP servers so boot into single UP mode server. Type following two parameters at Grub prompt
In addition, boot system into single UP mode then update your kernel and try it out again
Also as pointed by tom it is better if you give us exact kernel panic message. Otherwise, we cannot guess your message and it will make delay for you to get solution
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