Per your suggestions, here's what I did.
Connection via HDMI cable only running at the native 1920 resolution.
Working driver: 195.36.31
Non-working driver: 260.19.29
Ran 'X -logverbose 6' and captured the Xorg.0.log for each driver (see attached).
Since both logs contained timestamps which would cause major comparison issues, I ran them through a simple sed script to clean them up a bit.
$ sed -e's/Jan 11 17.*NVIDIA/NVIDIA/' Xorg.0.log.195 > 195.txt
$ sed -e's/Jan 11 17.*NVIDIA/NVIDIA/' Xorg.0.log.260 > 260.txt
Then a diff.
$ diff 195.txt 260.txt
< (==) Log file: "/var/log/Xorg.0.log", Time: Tue Jan 11 17:19:42 2011
> (==) Log file: "/var/log/Xorg.0.log", Time: Tue Jan 11 17:35:22 2011
< (II) NVIDIA GLX Module 195.36.31 Thu Jun 3 08:59:25 PDT 2010
> (II) NVIDIA GLX Module 260.19.29 Wed Dec 8 12:24:30 PST 2010
< (II) NVIDIA dlloader X Driver 195.36.31 Thu Jun 3 08:27:29 PDT 2010
> (II) NVIDIA dlloader X Driver 260.19.29 Wed Dec 8 12:10:14 PST 2010
< (--) NVIDIA(0): Connected display device(s) on ION at PCI:2:0:0:
> (--) NVIDIA(0): Connected display device(s) on ION at PCI:2:0:0
Also, Immediatley after installing 260, I did a diff on the xorg.conf to be sure nothing had changed in there.
$ diff xorg.conf xorg.conf.backup
< # nvidia-xconfig: version 260.19.29 (email@example.com) Wed Dec 8 12:27:39 PST 2010
> # nvidia-xconfig: version 1.0 (buildmeister@builder62) Thu Jun 3 09:41:37 PDT 2010
No matter what I did remotely via nvidia-settings with 260, I couldn't get anything to display on the screen. However, I could change everything interactively with 195.
Finally, reverted back to 195.36.31 but had to reboot in order to get gdm to start again. I couldn't simply do a 'sudo service gdm restart'.