Same behavior here. When pluging in the VGA cable system freezes and a hard 
reset is needed to recover.
The same thing happened in 9.10 although if I remember correctly when I first 
installed 9.10 (before any updates) the VGA out worked. I upgraded to 10.04 
from 9.10 using update-manager.

 distro: Ubuntu 10.4 LTS
 codename: lucid
 architecture: i686
 kernel: 2.6.32-22-generic-pae

 pc: SONY VAIO SR59XG 
 graphics card:  Mobile IntelĀ® Graphics Media Accelerator 4500MHD

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System freeze when plug a VGA cable to display device
https://bugs.launchpad.net/bugs/569857
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which is subscribed to xserver-xorg-video-intel in ubuntu.

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