As far as I recall, Ubuntu Karmic (9.10) installed GRUB 1.97~Beta4 by default. The grub.conf file is used only by GRUB-legacy (<=0.97).
Santosh, please try this. In /boot/grub there is a grubenv file. Delete it:
sudo rm /boot/grub/grubenv
If there was a previous boot failure prior to this problem, the recordfail var is set in the grubenv file. The recordfail is an Ubuntu mod to GRUB. On every boot, it looks at the recordfail var, and if its set, it disables automatic boot from the GRUB menu.
I know no other way of unsetting the recordfail var. On the next boot, a new grubenv file will be generated without the recordfail env set.