I've had the same behaviour after upgrading from Gutsy to Hardy
(everything was OK in Gutsy). But I've found solution for this -
installed package "startupmanager", then set resolution of screen
(1024x768 in my case) and color depth (24 bits in my case) on "Startup
Options" tab, hit "Close" and now everything is back again.

I also tried first workaround from Geoff Goehle but for me it showed
only statis usplash screen without any "movement" in progress bar (only
border). But my solution gives me whole functionality (fully-working
progress bar).

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gdm doesn't call usplash_down
https://bugs.launchpad.net/bugs/159262
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