I tried booting with the previous kernel version, but the lockup still
happened. It would appear that it wasn't the kernel that was at fault
but some other package, most likely xserver.

After today's updates to xserver, I can now shut down properly. There is
still some odd behaviour. Clicking on the "quit" button now causes the
login prompt to appear, instead of the panel giving one a choice of
logout, shutdown, reboot etc.

This has also happening in Karmic for several days.

-- 
Lockup on shutdown after Lucid kernel upgrade to 2.6.32-10
https://bugs.launchpad.net/bugs/506268
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