I fixed the problem but was wondering if anyone knew why.
I'm running openSUSE 11.4 w/ a customized 3.6.10 kernel.
After doing a zypper update at run level 3 (safer then 5), telinit 5 brought me back to the gdm login prompt. The keyboard no longer responded. Since <ctl><alt><F1> did not work, I logged in Via SSL from another machine and killed gdm. The keyboard worked fine at the command prompt.

I tried running ldconfig and the openSUSE config utilities, to no avail.

Long story short, I modified /etc/X11/xorg.conf, removing the comments from the server option that block automatic discovery of devices; my now hard coded 'kbd' would be used. Everything worked fine.