I can confirm this issue for Ubuntu 12.04 with nvidia driver version 295.40, GeForce 8800 GTX and GeForce 8400 M: Desktop is freezing and unusable.
Installing 295.33 from the x-org PPA solves the problem.
I can confirm this issue for Ubuntu 12.04 with nvidia driver version 295.40, GeForce 8800 GTX and GeForce 8400 M:
Desktop is freezing and unusable.
Installing 295.33 from the x-org PPA solves the problem.