I found workaround for my problem. I suppose it's not related to xorg or
nvidia drivers.
The main cause seems to be that I still had legacy grub from Ubuntu
version 9 not updated to grub2. Because of that, the running kernel
version (2.6.31-20) was not the latest istalled (2.6.32-22); grub-update
had no effect on grub menu and nvidia drivers package did not care about
old kernel.
** Also affects: grub (Ubuntu)
Importance: Undecided
Status: New
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Nvidia binary drivers not functioning after update
https://bugs.launchpad.net/bugs/590136
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