Found good workaround (almost solution): Installing native drivers from
Nvidia solves issue.

I installed this version - 
http://www.nvidia.com/Download/driverResults.aspx/77525/en-us
1) Download file from nvidia site
2) Add nouveau driver to blacklist (add "blacklist nouveau" to 
/etc/modprobe.d/blacklist (create this file, if it does not exist))
3) then run sudo update-initramfs -u
4) then reboot
5) chmod +x _here_is_path_to_downloaded_nvidia_driver_, then run it

Before step 5 you probably need to reboot to level 3

After this, Kubuntu works perfectly (like before upgrade)

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https://bugs.launchpad.net/bugs/1363408

Title:
  nvidia proprietary drivers are broken

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