Tried this mainline kernel:
http://kernel.ubuntu.com/~kernel-ppa/mainline/daily/2011-02-14-natty/linux-image-2.6.38-999-generic_2.6.38-999.201102140905_i386.deb

WIth this, when asking the system to suspend, the screen switches modes for a moment, then comes back as it was, the system doesn't suspend, and this appears in kern.log:

Feb 15 16:46:29 ubuntu kernel: [  272.025261] PM: Syncing filesystems ... done.
Feb 15 16:46:29 ubuntu kernel: [  272.026524] PM: Preparing system for mem sleep
Feb 15 16:46:31 ubuntu kernel: [  272.219749] Freezing user space processes ... (elapsed 0.01 seconds) done.
Feb 15 16:46:31 ubuntu kernel: [  272.235567] Freezing remaining freezable tasks ... (elapsed 0.01 seconds) done.
Feb 15 16:46:31 ubuntu kernel: [  272.251542] PM: Entering mem sleep
Feb 15 16:46:31 ubuntu kernel: [  272.251636] Suspending console(s) (use no_console_suspend to debug)
Feb 15 16:46:31 ubuntu kernel: [  272.251991] sd 0:0:0:0: [sda] Synchronizing SCSI cache
Feb 15 16:46:31 ubuntu kernel: [  272.252261] sd 0:0:0:0: [sda] Stopping disk
Feb 15 16:46:31 ubuntu kernel: [  272.272553] serial 00:09: disabled
Feb 15 16:46:31 ubuntu kernel: [  272.319364] tpm_tis 00:03: Operation Timed out
Feb 15 16:46:31 ubuntu kernel: [  272.319378] legacy_suspend(): pnp_bus_suspend+0x0/0x70 returns -62
Feb 15 16:46:31 ubuntu kernel: [  272.319383] PM: Device 00:03 failed to suspend: error -62
Feb 15 16:46:31 ubuntu kernel: [  272.687849] PM: Some devices failed to suspend
Feb 15 16:46:31 ubuntu kernel: [  272.687922] hub 1-0:1.0: activate --> -22
Feb 15 16:46:31 ubuntu kernel: [  272.687957] hub 2-0:1.0: activate --> -22
Feb 15 16:46:31 ubuntu kernel: [  272.687997] sd 0:0:0:0: [sda] Starting disk
Feb 15 16:46:31 ubuntu kernel: [  272.688484] serial 00:09: activated
Feb 15 16:46:31 ubuntu kernel: [  272.688832] hub 1-1:1.0: activate --> -22
Feb 15 16:46:31 ubuntu kernel: [  273.363784] PM: resume of devices complete after 677.095 msecs
Feb 15 16:46:31 ubuntu kernel: [  273.363875] PM: resume devices took 0.676 seconds
Feb 15 16:46:31 ubuntu kernel: [  273.363895] PM: Finishing wakeup.
Feb 15 16:46:31 ubuntu kernel: [  273.363896] Restarting tasks ... done.
Feb 15 16:46:31 ubuntu kernel: [  273.364781] video LNXVIDEO:01: Restoring backlight state
Feb 15 16:46:31 ubuntu kernel: [  273.489613] e1000e 0000:00:19.0: irq 40 for MSI/MSI-X
Feb 15 16:46:31 ubuntu kernel: [  273.545330] e1000e 0000:00:19.0: irq 40 for MSI/MSI-X
Feb 15 16:46:31 ubuntu kernel: [  273.545582] ADDRCONF(NETDEV_UP): eth0: link is not ready
Feb 15 16:46:31 ubuntu kernel: [  273.578363] ADDRCONF(NETDEV_UP): wlan0: link is not ready
Feb 15 16:46:32 ubuntu kernel: [  274.159126] EXT4-fs (sda1): re-mounted. Opts: errors=remount-ro,commit=0
Feb 15 16:46:34 ubuntu kernel: [  276.142784] e1000e: eth0 NIC Link is Up 1000 Mbps Full Duplex, Flow Control: None
Feb 15 16:46:34 ubuntu kernel: [  276.143107] ADDRCONF(NETDEV_CHANGE): eth0: link becomes ready
Feb 15 16:46:39 ubuntu kernel: [  281.851438] wlan0: authenticate with 00:22:90:50:1a:50 (try 1)
Feb 15 16:46:39 ubuntu kernel: [  281.853120] wlan0: authenticated
Feb 15 16:46:39 ubuntu kernel: [  281.853149] wlan0: associate with 00:22:90:50:1a:50 (try 1)
Feb 15 16:46:39 ubuntu kernel: [  281.855859] wlan0: RX AssocResp from 00:22:90:50:1a:50 (capab=0x431 status=0 aid=6)
Feb 15 16:46:39 ubuntu kernel: [  281.855864] wlan0: associated
Feb 15 16:46:39 ubuntu kernel: [  281.856265] ADDRCONF(NETDEV_CHANGE): wlan0: link becomes ready

Except for the inability to sleep, the system works fine after the failed attempt.