Comment 31 for bug 391044

Right, let me try to be crystal clear.

You *do not* need to install GRUB to the MBR to avoid this bug. You *do*
need to install a newer version of GRUB to wherever you originally put

This bug occurs when people have an old GRUB image *somewhere* that
they're using to boot, but never update it, so it can't understand the
new syntax in grub.cfg. GRUB 2 is as yet not entirely stable in terms of
things like file formats and so this sort of thing is to be expected.

(Though do bear in mind that GRUB 2 is less reliable when it's installed
in a partition boot sector rather than in the MBR; this forces it to use
the "blocklist" mechanism to locate its own bits rather than the more
reliable methods it can use when installed in the MBR, and in particular
this makes it less guaranteed to find the appropriate boot image on
multi-disk systems. The new version of grub2 in Debian, not yet merged
into Ubuntu, has a warning about this in its debconf templates. I think
we can and should continue to support this kind of setup insofar as it's
possible, but it does deserve a warning.)