Thank you for taking the time to report this bug and help to improve
Ubuntu.

The error in the log is:

frontend: Fatal IO error 11 (Resource temporarily unavailable) on X server :0.0.
User postinst hook script [/sbin/update-grub] exited with value 1
dpkg: error processing linux-image-2.6.31-14-generic (--configure):
 subprocess installed post-installation script returned error exit status 1

This indicates that grub needed to talk to your X server and was unable
to.  Since you specifically mention issues with the video display, it's
pretty clear that this is related to X and not actually a bug in grub;
reassigning to gnome-screensaver for further analysis.

** Package changed: grub (Ubuntu) => gnome-screensaver (Ubuntu)

-- 
9.04-9.10 upgrade, screen went blank during install
https://bugs.launchpad.net/bugs/470423
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