If you were using the NVIDIA binary driver the initial problem (xorg didn't 
start after updates) is _probably_ different to what you are seeing now you are 
trying to use vesa. In an attempt to solve the second problem can you do the 
following:
mv /etc/X11/xorg.conf /etc/X11/xorg.conf.old

and then restart gdm or reboot and report what happens?

** Changed in: xorg (Ubuntu)
       Status: New => Incomplete

-- 
[gutsy] xserver-xorg now fails to start 
https://bugs.launchpad.net/bugs/137652
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