This bug was fixed in the package xorg - 1:7.3+10ubuntu7

---------------
xorg (1:7.3+10ubuntu7) hardy; urgency=low

  * dexconf, failsafeDexconf: Default to using vmmouse, which is able to
    fall back to mouse if the system is not a virtual machine. Detecting
    it otherwise proved to be unreliable. (LP: #197337)

 -- Timo Aaltonen <[EMAIL PROTECTED]>   Thu, 13 Mar 2008 18:16:50
+0200

** Changed in: xorg (Ubuntu)
       Status: Confirmed => Fix Released

-- 
[hardy][wish] vmmouse should be default driver on kvm/qemu
https://bugs.launchpad.net/bugs/197337
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