I upgraded all packages with sudo apt-get upgrade command on my Ubuntu 10.04 box and I have Ubuntu 12.04 3.2.0-29-generic-pae now. I have two monitors and the following GPU:

01:00.0 VGA compatible controller: NVIDIA Corporation GT218 [NVS 300] (rev a2)

After upgrading to 12.04, I somehow lost my previous setup with one common workspace stretched across two monitors. When Ubuntu starts only one monitor is on. I can see the message on the active monitor:

Not optimum mode. Recommended mode: 1680x1050 60Hz

I used Nvidia proprietary drivers on 10.04 but now jockey-text --list shows:

xorg:nvidia_current - NVIDIA accelerated graphics driver (Proprietary, Disabled, Not in use)
xorg:nvidia_current_updates - NVIDIA accelerated graphics driver (post-release updates) (Proprietary, Enabled, Not in use)

When I run sudo nvidia-settings it says

You do not appear to be using the NVIDIA X driver.  Please edit your X configuration file (just run `nvidia-xconfig` as root), and restart the X server.' 

I typed nvidia-xconfig and rebooted, but jockey-text --list says the same after the reboot: Not in use. The same with nvidia-current - Enabled but Not in use. I also tried nvidia-173 but I ended up in tty immediately at startup so I removed it.

I used to have some problems with Nvidia proprietary drivers on 10.04, I had to put paths to EDID files in /etc/X11/xorg.conf explicitly, but the resolution was as recommended and both monitors were working.

If I understand correctly, nouveau drivers are used now by default because the resolution is still quite high, definitely not 800x600, xrandr showed:

xrandr: Failed to get size of gamma for output default
Screen 0: minimum 320 x 400, current 1600 x 1200, maximum 1600 x 1200
default connected 1600x1200+0+0 0mm x 0mm
   1600x1200      66.0* 
   1280x1024      76.0  
   1024x768       76.0  
   800x600        73.0  
   640x480        73.0  
   640x400         0.0  
   320x400         0.0  
  1680x1050_60.00 (0x4f)  146.2MHz
        h: width  1680 start 1784 end 1960 total 2240 skew    0 clock   65.3KHz
        v: height 1050 start 1053 end 1059 total 1089           clock   60.0Hz

However, colors seem a bit faded and blurry with nouveau drivers. Mouse cursor is invisible if it's placed inside Firefox window, and only one monitor is working. I like open source and if it's possible I'd prefer to use nouveau drivers but a few things should be fixed. I'm curious why nvidia-current drivers from the repository don't work now. I read it has something to do with the new X11 server in Ubuntu 12.04, is it true? How can I get it back to work?