Issue confirmed. Manual connection of wired internet restores
connectivity without having to use dhclient, etc. Network manager is
still running in the background. it seems NetwrokManager was renamed to
network-manager in /etc/init.d but a backup version of the old script
was left. Was this a relic of upstart conversion or something? Should i
delete the old NetwrokManager.dpkg-backup file?

** Changed in: network-manager-applet (Ubuntu)
       Status: New => Confirmed

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nm-applet does not start in karmic
https://bugs.launchpad.net/bugs/435856
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