[ubuntu] Problem with Intel integrated graphics after upgrade to 16.04 (blank screen)

Hello all,

I upgraded one desktop pc system to 16.04 and after first reboot screen went totally blank (permanently) at the point where KMS does the mode setting for higher resolution vga, and the system booted otherwise normally. I was able to remotely change boot parameters to "nomodeset" and after that I did get video, but obviously all the hardware acceleration features of Intel graphics were gone (and I need them). Without nomodeset it will stay blank no matter what I tried. Tv display is coected with motherboard HDMI (1920x1080) if that's of interest here.

Some specs:

CPU: model name : Intel(R) Core(TM) i5-3570K CPU @ 3.40GHz stepping : 9
keel: vmlinuz-4.4.0-21-generic (x86_64)
Motherboard: Asus P8Z77
X.Org X Server 1.18.3
xserver-xorg-video-intel 2:2.99.917+git20160325-1ubuntu1

In Xorg.0.log there are errors stating /dev/dri/card0 is not found, so I figure the problem lies with that keel driver initialization module is unsuccessful (even though lsmod shows that i915 driver is loaded) and therefore there are no suitable devices for Xorg server to write to for mode setting etc.

If I boot with keel 4.2.0-35-generic, the drivers work just fine without nomodeset.

Has anyone seen something like this? Do you have any ideas how to make this work? I noticed that some people are seeing similar symptoms with Core i5 3470K and keel 4.4 but I caot say if those were otherwise related to this.

I'd rather not have custom keel and/or proprietary display driver installed for simplicity, but that's not out of the question if nothing else works.

Best regards,

Kari