package nvidia-current 270.41.06-0ubuntu1 failed to install/upgrade: nvidia-current kernel module failed to build

Ubuntu 11.04 - the Natty Narwhal - released in April 2011 and supported until October 2012.
The problem is with...nvidia-current
NVIDIA binary Xorg driver, kernel module and VDPAU library version 270.41.06-0ubuntu1

The nvidia driver failed to install or upgrade during installation of kernel 3.0. Everything else went ok during the upgrade to kernel 3.0 besides this Nvidia driver that failed. Upon reboot into kernel 3.0 all is ok except there is no Unity, just basic Ubuntu desktop shell.

ProblemType: Package
DistroRelease: Ubuntu 11.04
Package: nvidia-current 270.41.06-0ubuntu1
Uname: Linux 3.0.0-0300-generic i686
Architecture: i386
CompizPlugins: No value set for `/apps/compiz-1/general/screen0/options/active_plugins'
CompositorRunning: None
CurrentDmesg: [ 73.456022] wlan0: no IPv6 routers present
Date: Fri Aug 26 10:42:41 2011
DistUpgraded: Fresh install
DistroCodename: natty
DistroVariant: ubuntu
DkmsStatus:
 nvidia-current, 270.41.06, 2.6.38-8-generic, i686: installed
 nvidia-current, 270.41.06, 2.6.38-11-generic, i686: installed
ErrorMessage: nvidia-current kernel module failed to build
GraphicsCard:
 nVidia Corporation ION LE VGA [10de:087e] (rev b1) (prog-if 00 [VGA controller])
   Subsystem: Acer Incorporated [ALI] Device [1025:0222]
InstallationMedia: Ubuntu 11.04 "Natty Narwhal" - Release i386 (20110427.1)
MachineType: Acer Aspire R1600
PackageVersion: 270.41.06-0ubuntu1
ProcKernelCmdLine: BOOT_IMAGE=/boot/vmlinuz-3.0.0-0300-generic root=UUID=01CC508EEEFF0410 loop=/hostname/disks/root.disk ro quiet splash
Renderer: Unknown
SourcePackage: nvidia-graphics-drivers
Title: package nvidia-current 270.41.06-0ubuntu1 failed to install/upgrade: nvidia-current kernel module failed to build
UnitySupportTest:
 Error: command ['/usr/lib/nux/unity_support_test', '-p'] failed with exit code 1: Xlib: extension "GLX" missing on display ":0".
 Xlib: extension "GLX" missing on display ":0".
 Xlib: extension "GLX" missing on display ":0".
 Error: unable to create the OpenGL context
UpgradeStatus: No upgrade log present (probably fresh install)
XorgConf:
 Section "Device"
  Identifier "Default Device"
  Option "NoLogo" "True"
 EndSection
dmi.bios.date: 11/03/2009
dmi.bios.vendor: American Megatrends Inc.
dmi.bios.version: P01-A4
dmi.board.asset.tag: To Be Filled By O.E.M.
dmi.board.name: FMCP7A-ION-LE
dmi.board.vendor: Acer
dmi.chassis.type: 3
dmi.chassis.vendor: Acer
dmi.modalias: dmi:bvnAmericanMegatrendsInc.:bvrP01-A4:bd11/03/2009:svnAcer:pnAspireR1600:pvr:rvnAcer:rnFMCP7A-ION-LE:rvr:cvnAcer:ct3:cvr:
dmi.product.name: Aspire R1600
dmi.sys.vendor: Acer
version.compiz: compiz 1:0.9.4+bzr20110606-0ubuntu1~natty2
version.libdrm2: libdrm2 2.4.23-1ubuntu6
version.libgl1-mesa-dri: libgl1-mesa-dri 7.10.2-0ubuntu2
version.libgl1-mesa-dri-experimental: libgl1-mesa-dri-experimental N/A
version.libgl1-mesa-glx: libgl1-mesa-glx 7.10.2-0ubuntu2
version.xserver-xorg: xserver-xorg 1:7.6+4ubuntu3.1
version.xserver-xorg-video-ati: xserver-xorg-video-ati 1:6.14.0-0ubuntu4.1
version.xserver-xorg-video-intel: xserver-xorg-video-intel 2:2.14.0-4ubuntu7.1
version.xserver-xorg-video-nouveau: xserver-xorg-video-nouveau 1:0.0.16+git20110107+b795ca6e-0ubuntu7