OK. Thanks for the VM. I could reproduce the problem.

Here's what's happening: The VM is created on a very old version of player or workstation, and it's official virtualHW version is 7. This causes the X server driver dispatcher to enable the old legacy driver that is not at all compatible with vmware fbdev. Still Ubuntu has forced fbdev on for 12.04, and there is a clash. By coincidence it happens with this upgrade, but it could have happened much earlier.

Remedy: 1: Update the VMs view of the virtual hardware:

0. BE SURE TO BACKUP YOUR VM, BE IT USING SNAPSHOTS OR A COPY

1a, For Workstation 9 or above owners, just run "Upgrade this VM"

1b (Completely unsupported and unrecommended) For player players: Get a recent vmware player, Change the .vmx file line virtualHW.version = "7" to "9" and fire up the VM. Verify that everything seems to work before proceeding.

Remedy 2: Disable vmwgfx fbdev in ubuntu.

0. BE SURE TO BACKUP YOUR VM, BE IT USING SNAPSHOTS OR A COPY

1. Edit the VM file /etc/modprobe.d/vmwgfx-fbdev.conf to say

options vmwgfx enable_fbdev=0

2. Run

sudo update-initramfs -u

3. Reboot

Eventually we might release a patched xf86-video-vmware that enables the newer modesetting driver whenever fbdev thinks the hardware version is new enough...

Thanks,

Thomas