I have just experienced the same issue after an upgrade.

I resolved it by doing

sudo apt-get remove linux-image-2.6.27-7-generic linux-restricted-
modules-2.6.27-7-generic linux-image-generic linux-restricted-modules-
generic linux-generic

followed by

sudo apt-get install linux-image-generic linux-restricted-modules-
generic linux-generic

I had to reboot and then visit the 'Hardware Drivers' tool afterwards to
make it reinstall the Nvidia driver but now everything seems to be fine.

-- 
package linux-image-2.6.27-7-generic 2.6.27-7.15 failed to install/upgrade: 
subprocess post-installation script returned error exit status 2
https://bugs.launchpad.net/bugs/291209
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