Firstly skunk's fix works for me.

Second, this is critical. Quite how many people realise you can do an
Alt+F1 to gain access to their systems I don't know, but those that do
not and have no remote access will be reinstalling and probably ending
up in the same hole.

My platform: 64-but Win7Pro with VMWare Player installing i686 11.04
server edition. The first installation was with a custom install of
11.04-server-mini which I then dist-upgrade and ended up with this issue
on reboot. The second was with 11.04-server (full ISO) which wen through
VMware's "Easy install" before I dist-upgraded it. Both experienced this
issue.

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https://bugs.launchpad.net/bugs/761830

Title:
  grub2 still hands off to blank tty7 on non-Server command-line-only
  systems and some Server systems

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