The older kernels (3.0-1 and 2.6.39 something) also don't work, so not that.
One thing I've had ever since I first upgraded that vm to OO is that during 
boot I get the message:
    error: runtime directory '/run/udev' not writeable, for now falling back 
.....

that's very early on (initrd?) - thought I'd mention it if we're looking
at udev stuff.

dpkg-log's below.  Note I've just tried

sudo stop lightdm
sudo start gdm

and gdm has the same issue.

I've also just tried:
update-initramfs -k all -u

and rebooted, didn't help

-- 
You received this bug notification because you are a member of Ubuntu-X,
which is subscribed to xorg in Ubuntu.
https://bugs.launchpad.net/bugs/807306

Title:
  [oneiric] Keyboard & mouse not working in X

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https://bugs.launchpad.net/ubuntu/+source/xorg/+bug/807306/+subscriptions

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