The latest update running with kernel 3.8.0-17.27 has resolved this
issue for me:

$ dpkg -l|grep nvidia
ii  nvidia-304                                   304.88-0ubuntu1                
            i386         NVIDIA binary Xorg driver, kernel module and VDPAU 
library
ii  nvidia-current                               304.88-0ubuntu1                
            i386         Transitional package for nvidia-current
ii  nvidia-settings                              304.51-0ubuntu2                
            i386         Tool for configuring the NVIDIA graphics driver

-- 
You received this bug notification because you are a member of Ubuntu-X,
which is subscribed to nvidia-graphics-drivers-304 in Ubuntu.
https://bugs.launchpad.net/bugs/1162013

Title:
  no terminals with nvidia graphics driver

To manage notifications about this bug go to:
https://bugs.launchpad.net/ubuntu/+source/nvidia-graphics-drivers-304/+bug/1162013/+subscriptions

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