For instances launched from SUSE Linux Enterprise Server 11 SP3 images released prior to January 28, 2015 the root filesystem does not expand. The issue is resolved with images released on or after January 28, 2015 and marked with a time stamp of v20150127 or greater.
SUSE Linux Enterprise Server 11 SP3 is based on a kernel that does not have the functionality to dynamically re-read the partition table. This makes it impossible to expand the root filesystem once the kernel is up and running and the root filesystem has been mounted. This missing kernel functionality was the root cause, until today, January 28, 2015 that the root filesystem did not expand. By modifying the initrd we are able to expand the root filesystem prior to it being mounted by the kernel and thus resolve this issue.