I am also experiencing this problem. I upgraded from Ubuntu 6.06 to 7.04
(via 6.10) and I've found that I've can no longer access any terminal
using CTRL-ALT-F1,F2,F3 etc.

Details:
Acer TravelMate laptop 4604title           Ubuntu, kernel 2.6.17-10-386
ATI Mobility Radeon X700
ATI driver version 3.65.5
LCD resolution 1280 x 800

I haven't made any changes to /boot/grub/menu.1st. I use the following
grub entry to boot

root            (hd0,5)
kernel          /vmlinuz-2.6.17-10-386 
root=UUID=028789cb-6baa-49e4-bb84-a0b07d825c16 ro quiet splash
initrd          /initrd.img-2.6.17-10-386
savedefault
boot

-- 
Usplash prevents/blocks TTY/Terminal Access
https://bugs.launchpad.net/bugs/76831
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