I discovered that after repeated booting and choosing the recovery mode option, 
eventually it enables the recovery menu to work and allow me to continue to 
boot normally.
This appears to coincide with when the disk-checker that kicks in periodically 
every x (10?) boots.
So my temporary workaround is tedious: 
Boot and reset x times (each time typing in my crypt key when prompted) and 
eventually I get a user login prompt and can then use >sudo gdm start

Here's hoping for a fix soon...

-- 
[Karmic] Grub recovery mode crashes
https://bugs.launchpad.net/bugs/460513
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