Here's a debdiff for karmic-proposed that makes the failsave-x upstart task 
abort if gdm isn't enabled.
Can you guys test it by editing your /etc/init/failsave-x.conf to look like 
this:

start on stopped gdm EXIT_STATUS=[!0]
stop on runlevel [06]

script

    [ ! -f /etc/X11/default-display-manager -o "$(cat /etc/X11/default-
display-manager 2>/dev/null)" = "/usr/sbin/gdm" ] || exit 0

    exec /etc/gdm/failsafeXServer

end script

** Attachment added: "xorg_7.4+3ubuntu11.debdiff"
   http://launchpadlibrarian.net/36504330/xorg_7.4%2B3ubuntu11.debdiff

-- 
after recent update which included xorg, xserver etc causes low-graphics mode 
error at start
https://bugs.launchpad.net/bugs/491483
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which is subscribed to xorg in ubuntu.

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