I'm running Ubuntu under VMware Player on Windows 7.
One of the updates that was applied was a new kernel version, 3.5.0-25-generic, so I tried booting from the previous version, but surprisingly this didn't help. A fresh install of Ubuntu was also no help, still broken. I finally got Gnome-shell working again by disabling 3D acceleration within the VMware Player display settings. This isn't a solution though, as it slows down video performance to an unacceptable level.
Ubuntu 12.04 seems to be fine, so I'm going back to that for now. I can't find anyone else complaining about this on the web yet. Is it just me?
I've performed a fresh install of Ubuntu 12.10 (32-bit), and it breaks as soon as the latest patches are applied. I reconfigured the display manager to try both lightdm and gdm, no help there. I also did a fresh install of 12.04, and that doesn't seem to have an issue. So, I've gotten rid of all my 12.10 instances, and I'm running 12.04 until further notice. If anyone finds a fix or discovers that this has been fixed in the repos, please let me know!
Update [here's the fix]:
After reading Gunnar's comment below, I started digging into the mesa drivers. The newer version 9.0.3 located in the Ubuntu 12.10 proposed repositories seems to fix the problem. To apply the fix, edit your /etc/apt/sources.list and add the following line:
deb http://us.archive.ubuntu.com/ubuntu/ quantal-proposed restricted main multiverse universe
(there's a space between proposed and restricted, sorry the text wrapped)
apt-get install libegl1-mesa-drivers
after you're done, you should be able to re-enable 3D and off you go. You can later remove the new line from your sources.list file if you don't want to receive other proposed updates. Please let me know if that helps everyone, and thanks Gunnar!