Had the same issue! For me, it was because I upgraded 9.10 -> 10.04 and
kept my modified menu.lst file. Running uname -r returned 2.6.31-14 even
though I was running Lucid. The latest updates messed up my nvidia
drivers. I ended up manually editing the kernels that were being booted
in my menu.lst file, updated grub, and uninstalled, reinstalled the
nvidia drivers and it worked.

-- 
package nvidia-current 195.36.15-0ubuntu2 failed to install/upgrade: 
nvidia-current kernel module failed to build / make[2]: *** No rule to make 
target `modules'.  Stop.
https://bugs.launchpad.net/bugs/563265
You received this bug notification because you are a member of Ubuntu-X,
which is subscribed to nvidia-graphics-drivers in ubuntu.

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