I got the following exception when my WebRole tries to start:
{"Could not load file or assembly 'Microsoft.WindowsAzure.Diagnostics, Version=2.0.0.0, Culture=neutral, PublicKeyToken=31bf3856ad364e35' or one of its dependencies. The located assembly's manifest definition does not match the assembly reference. (Exception from HRESULT: 0x80131040)":"Microsoft.WindowsAzure.Diagnostics, Version=2.0.0.0, Culture=neutral, PublicKeyToken=31bf3856ad364e35"}
I use Visual Studio 2012 with Azure SDK 2.1
nuget didn't reference Microsoft.WindowsAzure.Diagnostics and microsoft.windowsazure.serviceruntime
You have to reference it manually.