Thank you.
Interesting enough, update manager does the job of solving the problem for one 
of my laptops:
Compaq Evo N800c (old test machine).
Was on 2.6.31-20-generic #58 version with the problem.
I did run Update manager first to make sure it is up-to-date (requires restart).
Result was an upgrade to 2.6.31-21-generic #59.
I did plug in Huawei E620 USB Modem: it worked first time!

I tried the same thing on my other machine hp EliteBook 8530w same versions and 
still does not work.
Only difference is that I previoulsy installed Betavine and through Betavine it 
now works (did not work on 2.6.31-20).
Now trying to figure out what the difference is between the 2 machines.

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Huawei E620 usb modem doesn't work in 9.10 or 10.04 Beta 1
https://bugs.launchpad.net/bugs/545985
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