I am getting this error when booting a Live-DVD image also. After installation my system hangs when I click the "restart now" button. After a hard shutdown it says
The system is running in low graphics mode
I am not having any trouble with the first version of Ubuntu 12.04, it runs fine even after upgrading, so some modification made between the initial release of 12.04 and now has resulted in this incompatibility.
I am getting the same error while installing Lubuntu 12.04.
My motherboard is Asus VIA A8V-MX with integrated graphics card.
How can I solve this?