Comment 1 for bug 496100

This is true, confirmed.

The reason to the erraneous dependency is this.
Package "xserver-xorg-video-nouveau_0.0.10~git+20090823+569a17a-0ubuntu1"
provides virtual package "xserver-xorg-video-5".
On the other hand,
the package "xserver-xorg-core_1.7.2-2ubuntu2"
conflicts the very same virtual package "xserver-xorg-video-5".

But, instead,
the package "xserver-xorg-video-nv_2.1.15-1ubuntu1"
provides virtual package "xserver-xorg-video-6", which is not in conflict.

Also note, that the package nvidia-glx-185_185.18.36-0ubuntu9
does provide this same virtual package "xserver-xorg-video-5" and is in conflict.

This means that with the new xorg 1.7 one cannot install neither open nouveau nor closed nvidia-glx drivers.
One can only install the nv driver.
But then again the nv driver brakes the x somehow: only low graphics mode can be used.

See the bug #494166 for further info.