This bug appears to be triggered by the absence of an xorg.conf file.
Normally I don't have an xorg.conf file, so I was seeing the freeze.
However, I do not see a hang whenever I have an xorg.conf file with:
Section "ServerFlags"
Option "NoTrapSignals" "true"
EndSection
Even with this file I still get Ubuntu telling me that there are no
devices found because it tried to use nv. However, I can specify the
vesa driver and everything comes up ok.
--
Initial X session aborts "EnterVT failed for screen 0"
https://bugs.launchpad.net/bugs/519106
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which is subscribed to xserver-xorg-video-nv in ubuntu.
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