Problem with USB 2.0
On various (early?) T40 models, USB 2.0 may not function, or may function only at USB 1.1 speeds. Symptoms include inability to connect to USB 2.0 devices at USB 2.0 speeds, the "This device can perform faster" pop-up in Windows XP, device ID assignment error messages from the Linux kernel, and frequent reboots of the USB bus and connected devices.
So far, two possible causes have been suggested. In both cases, replacing the system board is the only solution.
Fried Southbridge USB controller
The Southbridge chip (containing the USB controller) may have been damaged by static electricity:
Mechanical Damage to Mainboard
Mechanical damage (from bending, dropping or vibrating the laptop) can lead to components becoming desoldered from the mainboard and no longer having reliable electrical contact:
Clearly, this is an electrical problem and not static electricity.
This seems to be a hardware problem with the USB controller on Intel's chip or related electronics. Sending the laptop in for service may help.
If the Linux kernel refuses to register the USB device, "modprobe -r ehci_hcd" may help. This disables USB 2.0 functionality for the session.
Unloading ehci_hcd as per above confirmed to work on T41 running Ubuntu Edgy. Also worked on a T40 running Debian Lenny.