Comment 16 for bug 756492

The original bug remains unfixed, in other words, the combination of nvidia-current (270.xxx) driver, Unity/Compiz and GeForce 7400go still doesn't work. Apparently, the decision was made to blacklist the know affected hardware, so that the fallback Gnome2 may start by default instead of Unity. IMHO, the bug has been triaged, but not fixed.
That said, there is an easy workaround, that worked for me. Install nvidia-173 instead of nvidia-current. If your card has been blacklisted, the fallback Gnome2 will load no matter what. To un-blacklist, add UNITY_FORCE_START=1 to /etc/environment.