I have the same problem, with a different Intel Graphics Controller (see
attachment).

After adding 'i915.modeset=0 acpi=off' to my kernel cmdline (removing
quiet and splaxh), I am able to boot into a graphical environment. But
the xserver falls back to the VESA driver. I'm unsure, if I need both options,
I will test that during the next reboots.

I've noticed that grub2 does not display the default graphical boot screen.
But, since I've reinstalled Karmic due to this bug, which replaced an existing
old grub installation, I don't know, if that's due to this bug. I had to 
uncomment
the 'GRUB_TERMINAL=console' line in /etc/default/grub.


** Attachment added: "lspci -vv  -d 8086:2992"
   http://launchpadlibrarian.net/36493727/lscpi-vv.txt

-- 
[965gm] xorg update results in blank screen on boot
https://bugs.launchpad.net/bugs/491856
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