The solution that's worked for me is toggling the input device on and off.
First you find the input device that's misbehaving:
foo@machine:$ xinput list
⎡ Virtual core pointer id=2 [master pointer (3)]
⎜ ↳ Virtual core XTEST pointer id=4 [slave pointer (2)]
⎜ ↳ TPPS/2 IBM TrackPoint id=12 [slave pointer (2)]
⎜ ↳ SynPS/2 Synaptics TouchPad id=11 [slave pointer (2)]
⎣ Virtual core keyboard id=3 [master keyboard (2)]
↳ Virtual core XTEST keyboard id=5 [slave keyboard (3)]
↳ Power Button id=6 [slave keyboard (3)]
↳ Video Bus id=7 [slave keyboard (3)]
↳ Sleep Button id=8 [slave keyboard (3)]
↳ Integrated Camera id=9 [slave keyboard (3)]
↳ AT Translated Set 2 keyboard id=10 [slave keyboard (3)]
↳ ThinkPad Extra Buttons id=13 [slave keyboard (3)]
Then you toggle that ID on and off, for me it's always been the Synaptics TouchPad (ID=11):
foo@machine:$ xinput set-prop 11 "Device Enabled" 0
foo@machine:$ xinput set-prop 11 "Device Enabled" 1
And now its all working again, I think this is definitely a bug. I've randomly observed it across 3 different laptops, but haven't had the change to debug it.