Why "packstack --allinone" fails with "Cinder's volume group 'cinder-volumes' could not be created" error message?

Issue

• Packstack fails with below error message.

Installing dependencies for Cinder...                  [ DONE ]
Checking if the Cinder server has a cinder-volumes vg...[ ERROR ]

ERROR : Cinder's volume group 'cinder-volumes' could not be created
Please check log file /var/tmp/packstack/20130730-055308-cOjCoi/openstack-setup.log for more information

• From log file,

2013-07-30 05:53:10::INFO::cinder_250::191::root:: A new cinder volumes group will be created
2013-07-30 05:53:10::ERROR::shell::83::root:: ============= STDERR ==========
2013-07-30 05:53:10::ERROR::shell::85::root:: Warning: Permanently added '10.9.10.43' (RSA) to the list of known hos
ts.
+ trap t ERR
+ mkdir -p /var/lib/cinder
+ dd if=/dev/zero of=/var/lib/cinder/cinder-volumes bs=1 count=0 seek=20G
0+0 records in
0+0 records out
0 bytes (0 B) copied, 8.848e-06 s, 0.0 kB/s
++ losetup --show -f /var/lib/cinder/cinder-volumes
+ LOFI=/dev/loop0
+ pvcreate /dev/loop0
  Can't initialize physical volume "/dev/loop0" of volume group "cinder-volumes" without -ff
++ t
++ exit 5

2013-07-30 05:53:11::ERROR::run_setup::889::root:: Traceback (most recent call last):
  File "/usr/lib/python2.6/site-packages/packstack/installer/run_setup.py", line 870, in main
    single_step_aio_install(options)
  File "/usr/lib/python2.6/site-packages/packstack/installer/run_setup.py", line 658, in single_step_aio_install
    single_step_install(options)
  File "/usr/lib/python2.6/site-packages/packstack/installer/run_setup.py", line 688, in single_step_install
    _main(answerfilepath)
  File "/usr/lib/python2.6/site-packages/packstack/installer/run_setup.py", line 577, in _main
    runSequences()
  File "/usr/lib/python2.6/site-packages/packstack/installer/run_setup.py", line 554, in runSequences
    controller.runAllSequences()
  File "/usr/lib/python2.6/site-packages/packstack/installer/setup_controller.py", line 90, in runAllSequences
    sequence.run(self.CONF)
  File "/usr/lib/python2.6/site-packages/packstack/installer/core/sequences.py", line 105, in run
    step.run(config=config)
  File "/usr/lib/python2.6/site-packages/packstack/installer/core/sequences.py", line 52, in run
    raise SequenceError(str(ex))
SequenceError: Cinder's volume group 'cinder-volumes' could not be created