Do you use KDM or GDM as login manager? I suspect, this is a problem
with upstart introduced by the following patch introduced in xorf
1:7.4+3ubuntu8:
xorg (1:7.4+3ubuntu8) karmic-proposed; urgency=low
* debian/local/Failsafe/failsafe{XServer,Xinit},
debian/x11-common.failsafe-x.upstart: convert Bulletproof-X support over
to upstart, for compatibility with gdm in karmic. LP: #474806.
* debian/rules: install the new upstart job with dh_installinit.
* debian/control: bump the debhelper versioned build-dependency for the
same
--
since last update "Ubuntu is running in low-graphics mode"
https://bugs.launchpad.net/bugs/481514
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