Switch off the computer by pressing the power button for a couple of seconds and then turn it on. If the grub menu to select ubuntu version does not appear, try turning off the computer while ubuntu boots. After the next startup the menu shows up.
In the grub menu, select "Previous Linux versions" and select the item with kernel version 2.6.35-28. This one booted properly on my laptop.
After logging in, change the grub menu so that the kernel 2.6.35 becomes the default instead of 2.6.38. Or simply remove the kernel image 2.6.38 using synaptic.
This is of course just a workaround and I also would be happy to read here an other solution that fixes the newest kernel somehow.