I've done a little google searching and and it seems that my issue is that Ubuntu is not able to use my GPU. Here is the CLI output:

root@ubuntu:/home/me# glxinfo | grep render
direct rendering: Yes
OpenGL renderer string: Software Rasterizer

root@ubuntu:/home/me# egrep "(GLX|DRI)" /var/log/Xorg.0.log
(==) AIGLX enabled
(II) Loading extension GLX
(II) Loading extension XFree86-DRI
(II) Loading extension DRI2
(WW) intel(0): DRI2: failed to open drm device
(II) AIGLX: Screen 0 is not DRI2 capable
(II) AIGLX: Screen 0 is not DRI capable
(II) AIGLX: Loaded and initialized /usr/lib/dri/swrast_dri.so
(II) GLX: Initialized DRISWRAST GL provider for screen 0

So the line "failed to open drm device" seems to be issue, but I don't know linux enough to know how to sort that. If you know, please share the knowledge. An explanation about how to prevent this in future would be helpful too, as I've done various Linux installs over the last few years and never had a problem like this.

It should show something along the line of:
$ egrep "(GLX|DRI)" /var/log/Xorg.0.log
(II) Loading extension XFree86-DRI
(==) AIGLX enabled
(II) Loading extension GLX
(II) Loading extension DRI2
(II) intel(0): [DRI2] Setup complete
(II) intel(0): direct rendering: DRI2 Enabled
(II) AIGLX: enabled GLX_MESA_copy_sub_buffer
(II) AIGLX: enabled GLX_SGI_swap_control and GLX_MESA_swap_control
(II) AIGLX: GLX_EXT_texture_from_pixmap backed by buffer objects
(II) AIGLX: Loaded and initialized /usr/lib/dri/i915_dri.so
(II) GLX: Initialized DRI2 GL provider for screen 0

glxinfo | grep render
direct rendering: Yes
OpenGL renderer string: Mesa DRI Intel(R) 915G GEM 20090712 2009Q2 RC3 x86/MMX/SSE2

My xorg.conf:
$ apt-cache policy xserver-xorg-video-intel
xserver-xorg-video-intel:
Installed: 2:2.9.1-1
Candidate: 2:2.9.1-1

make sure you have libgl1-mesa-dri, libgl1-mesa-glx, libdrm-intel1 all installed.

Graphics: Card Intel 82915G/GV/910GL Integrated Graphics Controller X.Org 1.6.5 Res: 1280x1024@60.0hz
GLX Renderer Mesa DRI Intel 915G GEM 20090712 2009Q2 RC3 x86/MMX/SSE2 GLX Version 1.4 Mesa 7.6.1 Direct Rendering Yes

It's not the same exactly. I got:

# apt-cache policy xserver-xorg-video-intel

xserver-xorg-video-intel:
Installed: 2:2.9.0-1ubuntu2
Candidate: 2:2.9.0-1ubuntu2
Version table:
*** 2:2.9.0-1ubuntu2 0
500 http://gb.archive.ubuntu.com karmic/main Packages
100 /var/lib/dpkg/status

I don't know how to check if I have those libraries you mentioned.

I'm still having issues with this. I've tried numerous things that have been in other related forum posts here and on other sites but nothing seems to solve the issue. I tried reinstalling the Intel driver, editing xorg.conf, and reconfiguring xserver - none of which helped.

Anyone that knows how to sort this then please let me know.

I've been trying to get help for this on UbuntuForums as well. It seems that the problem is due to the fact that I only have entries on Grub for the old install for 9.04

I know this can be edited on /boot/grub/menu.lst, but I have no idea what should be put there to load into 9.10 correctly. Anyone able to help?

Amazingly I now have this sorted - thanks to a post on ubuntuforums.org by 'hetx'. Basically /boot/grub/menu.lst still had the entry for 9.04 instead of 9.10 and there was no entry for vga:
I changed this to:
Which seems to have sorted it out. Now if I enter:
glxinfo | grep render

The output is:
direct rendering: Yes
OpenGL renderer string: Mesa DRI Intel(R) 965GM GEM 20090712 2009Q2 RC3 x86/MMX/SSE2