Comment 166 for bug 1166442

Answering my own question: Turns out the old psmouse was in the initramfs so running update-initramfs -u -k all and rebooting fixed it.

Also attempting to answer lohith's question: You have re-install the driver for every new kernel until support is added upstream. Just repeat the dkms commands, and run the update-initramfs command above, and you should be good.