I have this problem on a Dell Inspiron 1420.  It appears in both Gusty
and Hardy, though in Hardy there is no busy cursor visible.

I can reproduce it pretty easily using Blender 2.45 and the attached
blend file.  Just load the attached blend file and orbit the view around
for a minute or so, and it should freeze up pretty quickly.

** Attachment added: "A blend file that freezes X from Blender"
   http://launchpadlibrarian.net/14266500/blender_freeze.blend

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intel gm965 freezes with 3d applications
https://bugs.launchpad.net/bugs/120834
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