Kernel Panic after upgrade 3.4 can't not open zfs-functions

could you give more details about your system? do you use zfs? is / on zfs?
 
if that is your most recent kernel version, than you did not do a complete dist-upgrade (the current PVE 3.4 2.6.32 kernel is 2.6.32-46-pve). the missing file it is complaining about is part of zfsutils, and referenced in zfs-initramfs and zfsutils - maybe something went wrong with upgrading either of those?

I am afraid you will have to boot with a zfs capable live medium to investigate further:
  • chroot and do a complete dist-upgrade
  • check whether /etc/zfs/zfs-functions
  • check and potentially regenerate the initramfs (also needs to contain /etc/zfs/zfs-functions)