I got rid of the following lines in /etc/X11/xorg.conf:
Section "InputDevice"
Identifier "Synaptics Touchpad"
Driver "synaptics"
Option "SendCoreEvents" "true"
Option "Device" "/dev/psaux"
Option "Protocol" "auto-dev"
Option "SHMConfig" "on"
Option "HorizScrollDelta" "0"
EndSection
By getting rid of these lines, the touchpad started behaving normally again.
However, is this the way to resolve this (kind of a) bug?
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Ubuntu 8.04 alpha 4 - top toolbar buttons do not respond to mouse click
https://bugs.launchpad.net/bugs/192126
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