Having this issue at Karmic (having just upgraded), too

I got this message:
"usplash: Setting mode 1152 x 864 failed
usplash: Using mode 1024 x 768"

and resolved it by editing /etc/usplash.conf by changing its content to
"xres=1024
yres=768"

and afterwards executed

sudo update-initramfs -u

At the next restart everything was just fine ;-)

-- 
Boot starts with: "setting mode nnn x nnn failed"
https://bugs.launchpad.net/bugs/67826
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