Interesting thread regarding the problems with the 2.6.32-35 generic
kernel and it does seem that your freezing problems are due to this.
Curious that I'm running the same kernel here with an NVidia 7300 card
using the 195.36.24 driver and not a hitch ever since installing.

Has to be some sort of hardware incompatibility I guess but tracking
it down is another matter entirely. Main thing is you've found the
root cause and know what *not* to do for now. Problem is you'll can't
be sure that the next kernel upgrade will be compatible or not without
installing it and then it's back to square one if it doesn't take too
kindly to your hardware again.

Perhaps a spare HD to do a test install as and when the next kernel
update is released ??