This just happened to me while upgrading from 5.10 to 6.06LTS

The symbolic link trick described by Douglas Green did the job for me.
It turned out that after upgrading /usr/X11R6/bin/X was pointing at /usr/bin/X 
(in stead of /usr/bin/Xorg) and /usr/bin/X was pointing back at /usr/X11R6/bin/X

-- 
"GDM: Xserver not found" on reboot
https://launchpad.net/bugs/29055

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