This problem was caused by the failure of the xserver-xorg-core package
to remove an alternative which had been installed by the previous
release of the same package.
This is fixed in version 1.7.3.902-1ubuntu5.dsc.
Credit goes to Steve Langasek for spotting the cause of the problem
NOTE: if you want a quick fix you can simply reinstall xserver-xorg-core with
the following command and reboot:
sudo apt-get install --reinstall xserver-xorg-core
** Changed in: xorg (Ubuntu)
Status: In Progress => Fix Committed
--
Compositing cannot be re-enabled after upgrade
https://bugs.launchpad.net/bugs/506247
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