I think that using runlevel 3 means that Ubuntu wants to run in text mode due to
your video problem. You can change to runlevel 3 and next boot it will run in
text mode, but this will not resolve your problem.

I found this thread interesting.
http://ubuntuforums.org/showthread.php?p=4758458

It shows that many people are having similar problems and it seems to be linked
to the kernel they are using. when they switched kernels, it cleared up for some
people. For example one person was running kernel 2.6.24-16-rt and it cleared up
when he switched to 2.6.24-16-generic. RT stands for real time. You will have to
re-install your drivers afterwards.

To find out what kernel you are using, type: uname -r in the terminal. I am
using the generic kernel. Now I wonder what would happen if I installed the rt
kernel. If you are already running the generic kernel then we have to look at
other possibilities.