Found the offending part: /etc/grub.d/05_debian_theme which exited with status 
1 as it failed on
test -d "${GRUB_PREFIX}"; cd "${GRUB_PREFIX}"
and GRUB_PREFIX was not set.

As a band aid I cd'd to "/boot/grub" literally.

The distribution upgrade must have removed the definition of
GRUB_PREFIX, whereever it may have been before.

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https://bugs.launchpad.net/bugs/1078653

Title:
  upgrade Ubuntu 12.04 -> 12.10 has several problems: grub-pc, apport,
  older linux versions

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