Thanks for your report.
I think that the problem is with esound and the transition to
pulseaudio. Since Gutsy is not supported anymore it's hard to help. Can
you remove esound without uninstalling the whole destop, or if you
installed any pulseaudio package in gutsy by hand, you can try to remove
them before upgrading.
Sorry for not being able to help more.
** Changed in: update-manager (Ubuntu)
Status: New => Incomplete
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do-release-upgrade fails Gutsy to Hardy
https://bugs.launchpad.net/bugs/655459
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