I Actually resolved this. 
Seemes that an old installation had blacklisted nvidia-updates module from 
loading. 

After removing the blacklist from /etc/modprobe.d the nvidia driver
started working again.

The installer of the package should check if there exists an blacklist
of the module when installing, and remove this.

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You received this bug notification because you are a member of Ubuntu-X,
which is subscribed to nvidia-graphics-drivers in Ubuntu.
https://bugs.launchpad.net/bugs/1064358

Title:
  X in failsafe mode after installing Nvidia drivers

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https://bugs.launchpad.net/ubuntu/+source/nvidia-graphics-drivers/+bug/1064358/+subscriptions

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