I would also like to add something else to my fix. After rebooting X
will fail with the beta driver. I have no idea why but the only way I
was able to fix this was to uninstall the nvidia-kernel-common package
in addition to the nvidia-glx-new. So here is revision 2 of the work
around.

1. Download the 173.08 nvidia beta driver  here 
http://www.nvidia.com/object/unix.html click on archive and find the 173.08 
driver.
2. Purge the nvidia restricted package and the nvidia-kernel-package if 
installed by doing a "dpkg --purge nvidia-glx-new nvidia-kernel-common"
3. Kill the gdm server, "/etc/init.d/gdm stop"
4. Install the driver downloaded in step 1, unless you are brave you need to 
let the nvidia installer modify the xorg.conf file.
5. start gdm server "/etc/init.d/gdm start"

-- 
[Hardy] NVIDIA cards using vesa driver and low screen resolutions on livecd
https://bugs.launchpad.net/bugs/173418
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