Solution is generally described here:

If you cannot use USB keyboard after boot you must boot into older kernel on startup – either using grub menu or manual steps

  • check installed versions of the kernel:
    dpkg --get-selections|grep linux-image
  • you will very probably see in list that “linux-image-extra-x.x.x-xx-generic” package for the latest kernel is missing
  • install it using
    sudo apt-get install linux-image-extra-x.x.x-xx-generic -y
  • after reboot everything should be OK