Comment 57 for bug 477226

I'm a u350 owner too, and I can confirm this bug on Karmic (speakers and line out playing at the same time) and Lucid (line in/out not working).

Post #3 in this forum thread http://ubuntuforums.org/showthread.php?p=8824770 is about this and claims to have a solution. I don't know whether it works and I don't have the time to try this out myself at the moment, but maybe somebody else have?