I am experiencing what seems to be the same (or at least a similar) bug, with 
ubuntu going into low graphics mode after the update to 177. I'll attach the 
tarball with the log dump that one can get from the low graphics mode menu in 
Intrepid.
The card is a Nvidia 8400M G and I have not edited Xorg.conf.
In the meantime, I'll try some of the described workarounds.


** Attachment added: "Xorg.conf and X log"
   http://launchpadlibrarian.net/20986250/failsafeX-backup-090107163124.tar

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Intrepid: Latest update destroys X server configuration (Nvidia GeForce fx 5200 
nvidia-glx-177, also problem with 173)
https://bugs.launchpad.net/bugs/263528
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