Ubuntu 12.04 has been officially released and, with minor adjustments, the intel gma500 video card is working out of the box. See the last part of this post for suggestions on getting suspend working.

The “trick” is to use a few boot codes. Personally I use flash drives. Once I “install” Ubuntu to a flash drive, simply edit “syslinux.cfg” and add the following boot options.
quiet splash console=tty1 acpi_backlight=vendor acpi_osi=Linux acer_wmi.blacklist=yes mem=1920mb
Without the first option, console=tty1 the desktop (X) starts distorted, the desktop flickers and is partly displayed on the top of the screen. I could not get a screen shot of this. If you forget this option, simply run sudo service lightdm restart .
If you are getting a black screen, try disabling the boot splash (plymouth) by removing splash from the boot options.
quiet console=tty1 acpi_backlight=vendor acpi_osi=Linux acer_wmi.blacklist=yes mem=1920mb
Or if that fails, disable Plymouth altogether:
sudo mv /etc/init/plymouth.conf /etc/init/plymouth.conf.disabled
The next three options acpi_backlight=vendor acpi_osi=Linux acer_wmi.blacklist=yes enable the brightness buttons on the keyboard.
The acer_wmi module is both Acer specific and specific to my model (AO751h). If you do not have an AcerOne 751h, do not use it.
The acpi_backlight=vendor acpi_osi=Linux options are a bit more generic, but are also hardware dependent. Do not use them if your backlight works without these options (they have the potential to disable your backlight as was pointed out in the comments).

The last option, mem=1920mb allows more memory for the available for the gma500 and (slightly) improves performance. If you have 1 gb of ram, use mem=896mb
After installing, first restart X. ctrl-alt-f1 to get to a console, then
sudo service lightdm restart
Log in , then, using any editor, open /etc/default/grub
Change the line – GRUB_CMDLINE_LINUX_DEFAULT="quiet splash" to
GRUB_CMDLINE_LINUX_DEFAULT="quiet splash console=tty1 acpi_backlight=vendor acpi_osi=Linux acer_wmi.blacklist=yes mem=1920mb"
Or, if you are having a problem with a black screen, a more generic set of options would be
GRUB_CMDLINE_LINUX_DEFAULT="quiet console=tty1 acpi_backlight=vendor acpi_osi=Linux mem=896mb"
And then update grub
sudo update-grub
And finally reboot.
Additional workarounds / fixes
Black screen
From form dfrossar on the Ubuntu forums you can try 915resolution
Using any editor, create a file /etc/grub.d/01_915resolution , add in lines
echo insmod 915resolution
echo 915resolution 58 1366 768 32
Make the file executable
sudo chmod a+x /etc/grub.d/01_915resolution
Next, edit /etc/default/grub, assign value 1366x768x32 to variables GRUB_GFXMODE and GRUB_GFXPAYLOAD_LINUX (be sure to change “1366×768″ to your desired resolution):
GRUB_GFXPAYLOAD_LINUX=1366x768x32
Then update grub.
sudo update-grub
and reboot.
Fix Suspend
From “unziberla” in the comments below:
Guys, i fixed suspend on my AO751h with 12.04 starting from old patch for 11.10 from which i removed one quirk.
Open a terminal and use the following commands:
gksu gedit /etc/pm/config.d/gma500
Add in one of the following codes and save the file (apparently one “-” works for some and others need two “--” in front of “quirk-vbemode-restore”):
ADD_PARAMETERS='-quirk-vbemode-restore'
ADD_PARAMETERS='--quirk-vbemode-restore'