Hmm. I'm assuming a lot to make this suggestion, but it sounds like you are using one of the
-386 kernels instead of the -generic kernels. I don't know what the difference between these
two is supposed to be, but the symptoms match what I got just last week when the update chose
to install a -386 kernel. (It keeps on doing this on one box and I have no idea why.)
So basically ensure you have linux-image-generic and linux-restricted-modules-generic
installed, and if it does install some new kernel then boot into that... And uninstall
everything -386 related afterwards.