ok boot with kernel ver. 2.6.31-4-generic

bluetoothd is running 
ps aux|grep -i blue

root       254  0.0  0.0      0     0 ?        S<   19:32   0:00 [bluetooth]
root      2552  0.0  0.1  28472  1860 ?        S<s  19:34   0:00 /opt/bluetooth/sbin/bluetoothd --udev
<user>  3407  0.3  1.2 189584 12504 ?        S    19:34   0:00 bluetooth-applet

so udev seems to be doing its job.

sudo hciconfig
hci0:	Type: USB
	BD Address: 00:10:60:A5:4C:D1 ACL MTU: 192:8 SCO MTU: 64:8
	DOWN 
	RX bytes:1109 acl:0 sco:0 events:47 errors:0
	TX bytes:688 acl:0 sco:0 commands:47 errors:0

and

sudo hciconfig hci0 up
Can't init device hci0: Unknown error 132 (132)

As you would expect, the bluetooth applet is showing (i. adapter present) but with the wee red x to indicate not something...

ok... so its still running bluetooth from svn... after reinstalling and upgrading bluez, so running from /usr/sbin its the same problem

heres the output of:
/usr/sbin/bluetoothd -d -n 
bluetoothd[4261]: Bluetooth daemon 4.47
bluetoothd[4261]: Enabling debug information
bluetoothd[4261]: parsing main.conf
bluetoothd[4261]: discovto=0
bluetoothd[4261]: pairto=0
bluetoothd[4261]: pageto=8192
bluetoothd[4261]: name=%h-%d
bluetoothd[4261]: class=0x000100
bluetoothd[4261]: discov_interval=0
bluetoothd[4261]: Key file does not have key 'DeviceID'
bluetoothd[4261]: Starting SDP server
bluetoothd[4261]: Loading builtin plugins
bluetoothd[4261]: Loading service plugin
bluetoothd[4261]: Loading hciops plugin
bluetoothd[4261]: Loading hal plugin
bluetoothd[4261]: Loading storage plugin
bluetoothd[4261]: Loading plugins /usr/lib/bluetooth/plugins
bluetoothd[4261]: Loading audio plugin
bluetoothd[4261]: Loading netlink plugin
bluetoothd[4261]: Loading serial plugin
bluetoothd[4261]: Loading network plugin
bluetoothd[4261]: Loading input plugin
bluetoothd[4261]: register_interface: path /org/bluez/4261/any
bluetoothd[4261]: Registered interface org.bluez.Service on path /org/bluez/4261/any
bluetoothd[4261]: input.conf: Key file does not have key 'IdleTimeout'
bluetoothd[4261]: /etc/bluetooth/network.conf: Key file does not have key 'Disable'
bluetoothd[4261]: /etc/bluetooth/network.conf: Key file does not have key 'DisableSecurity'
bluetoothd[4261]: /etc/bluetooth/network.conf: Key file does not have key 'Interface'
bluetoothd[4261]: /etc/bluetooth/network.conf: Key file does not have key 'Interface'
bluetoothd[4261]: /etc/bluetooth/network.conf: Key file does not have key 'Interface'
bluetoothd[4261]: Config options: InterfacePrefix=bnep%d, PANU_Script=(null), GN_Script=(null), NAP_Script=(null), GN_Interface=pan0, NAP_Interface=pan1, Security=true
bluetoothd[4261]: Can't create GN bridge
bluetoothd[4261]: Starting experimental netlink support
bluetoothd[4261]: Failed to find Bluetooth netlink family
bluetoothd[4261]: Unix socket created: 9
bluetoothd[4261]: audio.conf: Key file does not have key 'AutoConnect'
bluetoothd[4261]: audio.conf: Key file does not have key 'MaxConnected'
bluetoothd[4261]: Telephony plugin initialized
bluetoothd[4261]: HFP AG features: "Ability to reject a call" "Enhanced call status" "Extended Error Result Codes" 
bluetoothd[4261]: HCI dev 0 registered
bluetoothd[4262]: Can't init device hci0: Unknown error 132 (132)
bluetoothd[4261]: child 4262 forked
bluetoothd[4261]: btd_adapter_ref(0x7f078426abb0): ref=1
bluetoothd[4261]: Entering main loop
bluetoothd[4261]: child 4262 exited
bluetoothd[4261]: RFKILL event idx 0 type 2 op 0 soft 1 hard 0
bluetoothd[4261]: RFKILL event idx 1 type 1 op 0 soft 1 hard 0

thats enough of touchpad mouse. going back to 2.6.28 8)
 Hope that helps, let me know what to try next. I dont mind building a vanilla 2.6.31 to check. but I'lle wait on your call.