Update: I found the reason and a possible fix for this bug.

Because of this mesg in the logs:
psmouse: Unknown parameter `synaptics_resume_reset'
the psmouse module was not loaded - I checked using 'lsmod'.

I searched for "synaptics_resume_reset" and came across the file 
/etc/modprobe.d/psmouse.conf which had this line:
options psmouse synaptics_resume_reset=N

This seems to be a temporary fix to load the psmouse module with this parameter 
(most probably required in Jaunty). Maybe this parameter does not exist in the 
module version in karmic. Anyways, I commented out this line and rebooted. 
the 'psmouse' kernel module is loaded and my touchpad is recognized now.  Yay!

I think the file '/etc/modprobe.d/psmouse.conf' should be deleted on
upgrading to karmic.

-- 
[Regression] touchpad not recognized on upgade to karmic (sony vaio VGN-SR220)
https://bugs.launchpad.net/bugs/467164
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