Ubuntu has been installed in VMWare using easy install (or something sounding like this). Therefore the OS starts now in text mode and to access GUI I have to type startx.
How to enable the GUI with graphical login screen?
/etc/default/grub file has following values inside:
....
GRUB_CMDLINE_LINUX_DEFAULT="quiet splash"
....
#GRUB_TERMINAL=console
so it corresponds to recommendations how to turn graphical login on.
The Grub configuration is only to do with actually booting the system. Once the kernel is loaded, that takes over.
The answer here suggests trying
sudo apt-get -f install gdm
in case the installation has dependency problems or checking/etc/init/gdm.conf
for start up rules.