If I disable the kernel mode setting (i.e. remove the "modeset=1" parameter to the i915 kernel module), things go back to work properly. Here is the xorg.0.log with kernel mode setting disabled.
** Attachment added: "Xorg.0.log" http://launchpadlibrarian.net/27832418/Xorg.0.log -- [i965gm] lower reslutions no longer available on LVDS with 2.7.99 (KMS) https://bugs.launchpad.net/bugs/385832 You received this bug notification because you are a member of Ubuntu-X, which is subscribed to xserver-xorg-video-intel in ubuntu. _______________________________________________ Mailing list: https://launchpad.net/~ubuntu-x-swat Post to : ubuntu-x-swat@lists.launchpad.net Unsubscribe : https://launchpad.net/~ubuntu-x-swat More help : https://help.launchpad.net/ListHelp