To fix this, simply install psb-kernel-sources and reboot.
sudo apt-get install psb-kernel-sourceReason for this is that the kernel modules are hard coded in a directory:
sudo shutdown -r now
/lib/modules/2.6.28-13-generic/updates/char/drm (drm.ko and psb.ko).
Installing the psb kernel sources creates a directory:
/lib/modules/`uname -r`/kernel/updates/char/dkms and in there the files drm.ko and psb.ko.
Why the kernel modules were hard coded in the first place is beyond me. Should work in the future.