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On a suggestion from Jordan, I switched to FlatDHCPManager for the networking mode and that fixed this problem.

To /etc/nova/nova.conf I added: --network_manager=nova.network.manager.FlatDHCPManager --flat_network_dhcp_start=192.168.0.2 --public_interface=eth0 --flat_interface=eth1 --flat_injected=False

I also removed the bridge from /etc/network/interfaces and restarted networking: /etc/init.d/networking restart

Then I restarted all of the nova services: restart libvirt-bin restart nova-network restart nova-compute restart nova-api restart nova-objectstore restart nova-scheduler