I had the same problem in 12.04. I was able to resolve it by removing
xfs from the font path in xorg.conf.
#FontPath"unix/:7100"
FontPath"/usr/share/fonts/X11/misc"
FontPath"/usr/share/fonts/X11/Type1"
This may be related to bug #738526.
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I have an nvidia card and i915 on the motherboard. I fixed update-
initramfs/modprobe i915 hanging by adding
blacklist i915
to /etc/modprobe.d/blacklist.conf and rebooting.
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