Thanks for your report.
The relevant error is
---
Running postinst hook script /usr/sbin/update-grub.
/etc/default/grub: 9: splash: not found
User postinst hook script [/usr/sbin/update-grub] exited with value 127
This error message indicates that the file has been edited, rendering it
invalid as a shell script. You will need to correct the broken line
(usually wrong quotes pasted from a forum) or simply remove the
/etc/default/grub file.
** Changed in: linux (Ubuntu)
Status: New => Invalid
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package linux-image-2.6.32-22-generic 2.6.32-22.33 failed to install/upgrade:
subprocess installed post-installation script returned error exit status 127
https://bugs.launchpad.net/bugs/576264
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