Comment 3 for bug 787590

Natty actually is the *first* release with that patch included (although it has propagated to lucid, through -stable), fixing the issues you described for older Nvidia controllers. The (more recent) USB chip on your system doesn't require this workaround (that's why previous releases worked just fine) - but as it's currently applied for *all* Nvidia chips, bad things happen on your machine.

For details, see bug 42149 and:
http://git.kernel.org/?p=linux/kernel/git/torvalds/linux-2.6.git;a=commit;h=2b7aaf503d56216b847c8265421d2a7d9b42df3e

That fix-up patch was merged for 2.6.40 and is CCed to stable.