I added the ubuntu-x-swap ppa, and updated. The problem seems to be
gone. I guess it was fixed by the swat team.


$ apt-cache policy xserver-xorg-video-intel
xserver-xorg-video-intel:
  Installed: 2:2.9.0-1ubuntu1
  Candidate: 2:2.9.0-1ubuntu1
  Version table:
 *** 2:2.9.0-1ubuntu1 0
        500 http://ca.archive.ubuntu.com karmic/main Packages
        100 /var/lib/dpkg/status
     2:2.9.0-1ubuntu1~xup~1 0
        500 http://ppa.launchpad.net karmic/main Packages



Here is what I did to add the swat ppa and fix my problem:
sudo apt-key adv --recv-keys --keyserver keyserver.ubuntu.com AF1CDFA9
sudo add-apt-repository ppa:ubuntu-x-swat/x-updates
sudo aptitude update
sudo aptitude safe-upgrade
sudo shutdown -r now

-- 
Mouse pointer flicker and Xorg uses 100% of a CPU
https://bugs.launchpad.net/bugs/446828
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