I'm not an ubuntu user, but I seem to have had a similar problem.

I have (at my office) a Dell Optiplex, with an Intel 965q chipset. I was
using Sidux (which is mostly Debian unstable). When I upgraded xserver-
xorg-video-intel to 2.1.1 (in Debian unstable), my computer would hang
at boot-up, just when X was starting. It was a complete hard freeze : no
keyboard shortcuts worked, and I had to shut off the computer using the
on-off button. [If I booted in single-user mode, I usually could start X
as root, but even that was iffy.]

And it turns out that there was a similar bug reported at Xorg, only
occurring with the Intel 965 chipset, and only with versions 2.1.1 and
2.2.1 of xserver-xorg-video-intel.

Changing the driver in "xorg.conf" from "intel" to "vesa" stopped the
problem, but the screen resolution didn't look that great.

But I think (knock wood) that it got fixed when I downloaded the latest
xserver-xorg-video-intel package --- 2.3.0 -- from Debian experimental.
I don't know if that  would work on a Ubuntu system. But maybe you could
get the Ubuntu maintainers to upgrade the xserver-xorg-video-intel
package to 2.30 (I think 2.2.9* would also work) in the hardy heron
release?

-- 
X starts with black screen / blue screen (i965G)
https://bugs.launchpad.net/bugs/153188
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