just an update - 
I've installed karmic koala beta, and this problem still persists. However, I 
haven't had the redrawing issues yet.

g...@lappy586:~/Desktop/jaunty-backup$ dpkg -l | grep nvidia | grep 185
ii  nvidia-185-kernel-source              185.18.36-0ubuntu3                    
     NVIDIA binary kernel module source
ii  nvidia-185-libvdpau                   185.18.36-0ubuntu3                    
     Video Decode and Presentation API for Unix
ii  nvidia-185-modaliases                 185.18.36-0ubuntu3                    
     Modaliases for the NVIDIA binary X.Org driver
ii  nvidia-glx-185                        185.18.36-0ubuntu3                    
     NVIDIA binary Xorg driver

from Xorg.0.log:
(II) NVIDIA(0): NVIDIA GPU GeForce 8400M GS (G86M) at PCI:1:0:0 (GPU-0)
(--) NVIDIA(0): Memory: 262144 kBytes

-- 
Nvidia driver detects VRAM incorrectly
https://bugs.launchpad.net/bugs/363135
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