nvidia-current-updates 295.49-0ubuntu0.1: nvidia-current-updates kernel module failed to build

I am using kernel 3.2.0-27-generic-pae and the compiler complains about a sanity check. Here is the make.log

DKMS make.log for nvidia-current-updates-295.49 for kernel 3.2.0-27-generic-pae (i686)
сб юли 28 12:01:21 EEST 2012

The C compiler 'cc' does not appear to be able to
create executables. Please make sure you have
your Linux distribution's gcc and libc development
packages installed.

*** Failed CC sanity check. Bailing out! ***

make: *** [select_makefile] Error 1

I have all the needed packages as all previous nvidia updates worked fine prio to 3.2.0-27

ProblemType: Package
DistroRelease: Ubuntu 12.04
Package: nvidia-current-updates 295.49-0ubuntu0.1
ProcVersionSignature: Ubuntu 3.2.0-27.43-generic-pae 3.2.21
Uname: Linux 3.2.0-27-generic-pae i686
ApportVersion: 2.0.1-0ubuntu12
Architecture: i386
CompizPlugins: No value set for `/apps/compiz-1/general/screen0/options/active_plugins'
CompositorRunning: None
DKMSKernelVersion: 3.2.0-27-generic-pae
Date: Sat Jul 28 12:01:26 2012
DistUpgraded: 2012-03-16 01:00:49,042 DEBUG enabling apt cron job
DistroCodename: precise
DistroVariant: ubuntu
DkmsStatus:
 nvidia-current, 295.40: added
 nvidia-current-updates, 295.49: added
 vboxhost, 4.1.18, 3.2.0-26-generic-pae, i686: installed
 vboxhost, 4.1.18, 3.2.0-27-generic, i686: installed
 vboxhost, 4.1.18, 3.2.0-27-generic-pae, i686: installed
GraphicsCard: NVIDIA Corporation GF104 [GeForce GTX 460] [10de:0e22] (rev a1) (prog-if 00 [VGA controller])
InstallationMedia: Ubuntu 9.10 "Karmic Koala" - Release i386 (20091028.5)
MachineType: Gigabyte Technology Co., Ltd. EP45-UD3LR
PackageVersion: 295.49-0ubuntu0.1
ProcKernelCmdLine: BOOT_IMAGE=/boot/vmlinuz-3.2.0-27-generic-pae root=/dev/mapper/isw_debgedhihe_Main_RAID0p2 ro quiet splash vt.handoff=7
SourcePackage: nvidia-graphics-drivers-updates
Title: nvidia-current-updates 295.49-0ubuntu0.1: nvidia-current-updates kernel module failed to build
UnitySupportTest: Error: command ['/usr/lib/nux/unity_support_test', '-p', '-f'] failed with exit code 5: Error: GLX is not available on the system
UpgradeStatus: Upgraded to precise on 2012-03-15 (134 days ago)
dmi.bios.date: 04/22/2010
dmi.bios.vendor: Award Software International, Inc.
dmi.bios.version: F11
dmi.board.name: EP45-UD3LR
dmi.board.vendor: Gigabyte Technology Co., Ltd.
dmi.board.version: x.x
dmi.chassis.type: 3
dmi.chassis.vendor: Gigabyte Technology Co., Ltd.
dmi.modalias: dmi:bvnAwardSoftwareInternational,Inc.:bvrF11:bd04/22/2010:svnGigabyteTechnologyCo.,Ltd.:pnEP45-UD3LR:pvr:rvnGigabyteTechnologyCo.,Ltd.:rnEP45-UD3LR:rvrx.x:cvnGigabyteTechnologyCo.,Ltd.:ct3:cvr:
dmi.product.name: EP45-UD3LR
dmi.sys.vendor: Gigabyte Technology Co., Ltd.
version.compiz: compiz 1:0.9.7.8-0ubuntu1.2
version.libdrm2: libdrm2 2.4.32-1ubuntu1
version.libgl1-mesa-dri: libgl1-mesa-dri 8.0.3-0ubuntu0.1
version.libgl1-mesa-dri-experimental: libgl1-mesa-dri-experimental N/A
version.libgl1-mesa-glx: libgl1-mesa-glx 8.0.3-0ubuntu0.1
version.xserver-xorg-core: xserver-xorg-core 2:1.11.4-0ubuntu10.6
version.xserver-xorg-input-evdev: xserver-xorg-input-evdev 1:2.7.0-0ubuntu1.2
version.xserver-xorg-video-ati: xserver-xorg-video-ati 1:6.14.99~git20111219.aacbd629-0ubuntu2
version.xserver-xorg-video-intel: xserver-xorg-video-intel 2:2.17.0-1ubuntu4
version.xserver-xorg-video-nouveau: xserver-xorg-video-nouveau 1:0.0.16+git20111201+b5534a1-1build2