Steve, Right, that's was exactly so - I rebooted right after kernel was upgraded and popup "Reboot is required. Should I reboot right now?" appeared. After booting I run $(aptitude update) and it suggested me to run $(dpkg --configure -a). That finally fixed my system.
Here is relevant bug: https://bugs.launchpad.net/ubuntu/+source/update- notifier/+bug/30759 -- [Karmic beta] System hangs after initramfs, md1_crypt (running) https://bugs.launchpad.net/bugs/450620 You received this bug notification because you are a member of Ubuntu Bugs, which is subscribed to Ubuntu. -- ubuntu-bugs mailing list ubuntu-bugs@lists.ubuntu.com https://lists.ubuntu.com/mailman/listinfo/ubuntu-bugs