problem solved:

I made some unrelated changes to menu.lst then did an update-grub.
To my surprise, in the diff it showed adding the line: "initrd  
/initrd.img-3.0.0-12-generic"
Apparently, during the upgrade from natty, the installer 'forgot' to add this 
very cruical line and i hadn't noticed.
all is good now (except that boot time takes an extra 90s bcuz its waiting for 
the network to come up, but it does that an all my kernels, so i'll have to 
file a sep bug for that).

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https://bugs.launchpad.net/bugs/884219

Title:
  Kernel panic - not syncing: VFS: unable to mount root fs on unknown-
  block (0,0)

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