Unfortunately, the hardware you use falls into the category of "abandoned by the vendor". i8xx chips have been causing xserver lockups for years, with Intel unable or unwilling to provide fixes. There is a good overview of the predicament in the i8xx unsupported wiki. I wish there had been a solution, but it is highly unlikely that anyone will ever bother fixing it. As far as I know, none of the modern desktop distos will work with Intel's i810. You could try using it as a server with no X, or get a supported PCI graphics card.
There seems to be a vicious pattern with some of Intel's hardware. First, it works reasonably well, then, as the Linux kernel evolves, and regressions creep in, things start breaking, and Intel guys either completely ignore the problems, or disable the features that caused them (like hardware acceleration).
Ubuntu 12.04 is not designed for graphics card from 2005, it relies heavily on OpenGL. Consider trying out Xubuntu or Lubuntu.
– Sep 07 '12 at 11:29