I have a ThinkPad T60 (hda-intel sound) and I was noticing that the volume buttons produce very coarse/abrupt volume changes. I guessed that the volume buttons were changing some internal (direct to speaker) volume and, because of key mappings, were simultaneously changing the Master volume found in the software volume control.

So I disabled the key mapping to the two volume controls found in System -> Preferences -> Keyboard Shortcuts. Now the volume control is much better with the two buttons. It behaves much more like it does in Windows. Pushing the buttons doesn’t change any of the “Software” volume, as I prefer. Unfortunately, it also stops the nice Volume OSD from appearing.

Source: http://ubuntuforums.org/archive/index.php/t-496180.html

Update: A solution can be found later in the thread at http://ubuntuforums.org/showpost.php?p=4807282&postcount=23