The exact same issue just happened to me about an hour ago.  There was a
whole lot of new updates, including a new kernel (2.6.27.3)  and new
nvida drivers (177 mostly, it seemed).  Prior to the update, my card and
graphics were working perfectly, but after the update I'm experiencing
the exact same symptoms as described by simonjames.  My system was an
upgrade from 8.04.1 to alpha 5.

-- 
Ubuntu 8.10 breaks nvidia drivers
https://bugs.launchpad.net/bugs/267188
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