Also affects me with 945GME on Karmic (latest packages as of 2009-09-21, 
2.6.31-10-generic kernel).
Worked before upgrade on Jaunty.

VGA compatible controller: Intel Corporation Mobile 945GME Express
Integrated Graphics Controller (rev 03)

Problem went away when I added "i915.modeset=0 nomodeset" to kernel command 
line.
Will try to apport-collect.

P.S. dmesg includes the line:

[    0.000000] Unknown boot option `i915.modeset=0': ignoring

so it's probably "nomodeset" that does the trick.

-- 
[i855] No Xv support for 82852/855GM (KMS bug)
https://bugs.launchpad.net/bugs/395932
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