I am unsure if it's an issue with the new upstart, but I could not get upstart to work without changing "start on." hopefully this helps someone as it took me some time to figure out. WebUI can remain the same.
# deluged - Deluge daemon
#
# The daemon component of Deluge BitTorrent client. Deluge UI clients
# connect to this daemon via DelugeRPC protocol.
description "Deluge daemon"
author "Deluge Team"
# Start the media server after network and filesystem
# Otherwise this lead to a unresponsive server
start on filesystem and net-device-up IFACE!=lo
stop on runlevel [016]
respawn
respawn limit 5 30
env uid=deluge
env gid=deluge
env umask=007
exec start-stop-daemon -S -c $uid:$gid -k $umask -x /usr/bin/deluged -- -d