crc error after update linux kernal

can you give us the output of
$ sudo cat /boot/grub/menu.lst
please?

venu@venu-desktop:~$ sudo cat /boot/grub/menu.lst
[sudo] password for venu:
# menu.lst - See: grub(8), info grub, update-grub(8)
# grub-install(8), grub-floppy(8),
# grub-md5-crypt, /usr/share/doc/grub
# and /usr/share/doc/grub-doc/.

## default num
# Set the default entry to the entry number NUM. Numbering starts from 0, and
# the entry number 0 is the default if the command is not used.
#
# You can specify 'saved' instead of a number. In this case, the default entry
# is the entry saved with the command 'savedefault'.
# WARNING: If you are using dmraid do not use 'savedefault' or your
# array will desync and will not let you boot your system.
default 0

## timeout sec
# Set a timeout, in SEC seconds, before automatically booting the default entry
# (normally the first entry defined).
timeout 10

## hiddenmenu
# Hides the menu by default (press ESC to see the menu)
#hiddenmenu

# Pretty colours
#color cyan/blue white/blue

## password ['--md5'] passwd
# If used in the first section of a menu file, disable all interactive editing
# control (menu entry editor and command-line) and entries protected by the
# command 'lock'
# e.g. password topsecret
# password --md5 $1$gLhU0/$aW78kHK1QfV3P2b2znUoe/
# password topsecret

#
# examples
#
# title Windows 95/98/NT/2000
# root (hd0,0)
# makeactive
# chainloader +1
#
# title Linux
# root (hd0,1)
# kernel /vmlinuz root=/dev/hda2 ro
#

#
# Put static boot stanzas before and/or after AUTOMAGIC KERNEL LIST

### BEGIN AUTOMAGIC KERNELS LIST
## lines between the AUTOMAGIC KERNELS LIST markers will be modified
## by the debian update-grub script except for the default options below

## DO NOT UNCOMMENT THEM, Just edit them to your needs

## ## Start Default Options ##
## default kernel options
## default kernel options for automagic boot options
## If you want special options for specific kernels use kopt_x_y_z
## where x.y.z is kernel version. Minor versions can be omitted.
## e.g. kopt=root=/dev/hda1 ro
## kopt_2_6_8=root=/dev/hdc1 ro
## kopt_2_6_8_2_686=root=/dev/hdc2 ro
# kopt=root=UUID=e56961b2-b5cd-4cc6-8fde-770e1d62a0e7 ro xforcevesa

## default grub root device
## e.g. groot=(hd0,0)
# groot=e56961b2-b5cd-4cc6-8fde-770e1d62a0e7

## should update-grub create alternative automagic boot options
## e.g. alternative=true
## alternative=false
# alternative=true

## should update-grub lock alternative automagic boot options
## e.g. lockalternative=true
## lockalternative=false
# lockalternative=false

## additional options to use with the default boot option, but not with the
## alternatives
## e.g. defoptions=vga=791 resume=/dev/hda5
# defoptions=quiet splash

## should update-grub lock old automagic boot options
## e.g. lockold=false
## lockold=true
# lockold=false

## Xen hypervisor options to use with the default Xen boot option
# xenhopt=

## Xen Linux kernel options to use with the default Xen boot option
# xenkopt=console=tty0

## altoption boot targets option
## multiple altoptions lines are allowed
## e.g. altoptions=(extra menu suffix) extra boot options
## altoptions=(recovery) single
# altoptions=(recovery mode) single

## controls how many kernels should be put into the menu.lst
## only counts the first occurence of a kernel, not the
## alternative kernel options
## e.g. howmany=all
## howmany=7
# howmany=all

## should update-grub create memtest86 boot option
## e.g. memtest86=true
## memtest86=false
# memtest86=true

## should update-grub adjust the value of the default booted system
## can be true or false
# updatedefaultentry=false

## should update-grub add savedefault to the default options
## can be true or false
# savedefault=false

## ## End Default Options ##

title Ubuntu 8.10, kernel 2.6.27-11-generic
uuid e56961b2-b5cd-4cc6-8fde-770e1d62a0e7
kernel /boot/vmlinuz-2.6.27-11-generic root=UUID=e56961b2-b5cd-4cc6-8fde-770e1d62a0e7 ro xforcevesa quiet splash
initrd /boot/initrd.img-2.6.27-11-generic
quiet

title Ubuntu 8.10, kernel 2.6.27-11-generic (recovery mode)
uuid e56961b2-b5cd-4cc6-8fde-770e1d62a0e7
kernel /boot/vmlinuz-2.6.27-11-generic root=UUID=e56961b2-b5cd-4cc6-8fde-770e1d62a0e7 ro xforcevesa single
initrd /boot/initrd.img-2.6.27-11-generic

title Ubuntu 8.10, kernel 2.6.27-7-generic
uuid e56961b2-b5cd-4cc6-8fde-770e1d62a0e7
kernel /boot/vmlinuz-2.6.27-7-generic root=UUID=e56961b2-b5cd-4cc6-8fde-770e1d62a0e7 ro xforcevesa quiet splash
initrd /boot/initrd.img-2.6.27-7-generic
quiet

title Ubuntu 8.10, kernel 2.6.27-7-generic (recovery mode)
uuid e56961b2-b5cd-4cc6-8fde-770e1d62a0e7
kernel /boot/vmlinuz-2.6.27-7-generic root=UUID=e56961b2-b5cd-4cc6-8fde-770e1d62a0e7 ro xforcevesa single
initrd /boot/initrd.img-2.6.27-7-generic

title Ubuntu 8.10, memtest86+
uuid e56961b2-b5cd-4cc6-8fde-770e1d62a0e7
kernel /boot/memtest86+.bin
quiet

### END DEBIAN AUTOMAGIC KERNELS LIST

# This is a divider, added to separate the menu items below from the Debian
# ones.
title Other operating systems:
root

# This entry automatically added by the Debian installer for a non-linux OS
# on /dev/sda1
title Microsoft Windows XP Professional
root (hd0,0)
savedefault
chainloader +1

No error in this...
You could try to rebuild the initramfs, which will e.g. not help... or what I suggest:
Use the old kernel for now, as this seems ato be an incompatibility with especially your machine and especially this kernel. (Goggled around a bit on this, as I'm interested in such cases a lot.)

Greetings

ps: You can change the default selected kernel for grub in the menu.lst file mentioned above. So in this case change "default" from "0" to "2" for the old kernel to be selected.