Thanks for your bugreport.
Could you please run:
$ sudo do-release-upgrade --mode=desktop
and let me know if that works better?
** Changed in: update-manager (Ubuntu)
Assignee: (unassigned) => Michael Vogt (mvo)
Status: New => Incomplete
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7.10->8.04 attempts to remove ubuntu-desktop due to broken dep on
pulseaudio-esound-compat
https://bugs.launchpad.net/bugs/244368
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