I have a similar problem running Ubuntu Meerkat on an old Dell Latitude
D500 that uses Intel GMA 855 graphics hardware. This problem began for
me after doing an update a few days ago, and persists after this
morning's kernel update. Everything works normally as before, except
that I cannot draw a mouse cursor to save my life if the system boots
normally. I tried playing with xorg.conf, using vesa driver instead of
the default, explicitly turning on the SWCursor, etc. The only thing I
found that restores the cursor is choosing Recovery in the Grub menu and
then coming up using failsafeX. However, if I copy xorg.conf.failsafe
over to xorg.conf and then come up normally - that still does not work.

Strangely when booting normally, even splash works! Just ... no cursor.

I also tried the "sudo lshw -c display" trick suggested in bug #601172,
but that hung my system like a horse.

-- 
[855gm] 2.6.35-14: Invisible Cursor
https://bugs.launchpad.net/bugs/614176
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