Having same issues.    Here's a bit more info.

Installed 12.04 32-bit on a system with an ATI Radeon with dual Sceptre
X20 displays.

All seemed to go fine.

Tried to reconfigure displays to non-mirroring.   Found that I couldn't.
ATI proprietary driver(s) not installed.

Installed these.   Got a pop-up saying I'd need to reboot for new
drivers to be activated.

Rebooted.

USB keyboard and mouse no longer work.

These devices seem to freeze long before the login screen comes up.  As
of the time the mouse pointer first appears on the screen, mouse input
yields no effect on this pointer.

Have tried uninstalling / reinstalling fglrx.

Have tried uninstalling / reinstalling udev.

No effect in either case.

Have also tried using xorg.conf.failsafe (copying it to xorg.conf) in
/etc/X11.  No effect other than for another popup X11 startup that tells
me monitor will now come up in low-res mode.    Never gets past this.

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https://bugs.launchpad.net/bugs/990870

Title:
  External USB keyboard not working in Ubuntu 12.04

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