Solved!!!
The default /etc/default/grub had
#GRUB_TERMINAL=console
#GRUB_GFXMODE=640X480

As I understand since console mode is disabled grub runs in graphical
menu mode, whose default resolution is specified by key GRUB_GFXMODE,
but this key is commented out too, so GRUB has no predefined resolution
to work at. Apparently in my case, it picked out an inappropriate
resolution, hence the "out of range" error. All I had to do was
uncomment GRUB_GFXMODE=<something sensible, run vbeinfo> 1024x768 and
the pretty menu is back.

If we want GRUB graphical as the default bootmanager for Natty, perhaps
we should uncomment this by default, because atleast on my hardware,
GRUB doesn't figure out sensible defaults by itself. Perhaps set it to
some safe value such as 640x480 which all BIOSes support?

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https://bugs.launchpad.net/bugs/768716

Title:
  error: symbol not found: 'grub_divmod64_full'

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