Hi faisalsazar and welcome.

It sounds like the nVidia driver is crashing.  I presume you do not get these problems with the Intel graphics when the Vaio is set to 'Stamina' Mode?

The problem is that the driver is a NVIDIA® GeForce® GT 330M GPU + Intel® HD Graphics single hybrid driver which supports both graphics chips and also supports the 'hot switching' of graphics chips.  As far as I am aware, there has been no driver update since April 2010 as Sony does not seem to update these hybrid drivers - and nobody else will!

I think your first port of call should be Vaio Support to see if a hybrid driver update is scheduled but don't hold your breath.

Failing that, you can try reinstalling the original hybrid driver to eliminate the possibility of the driver having become corrupt.

Further action will depend on how you use the switchable graphics.  If you don't use the Intel graphics and are only interested in the nVidia graphics, then you can probably install an up to date unified nVidia driver which may fix the nVidia graphics but scupper the Intel version and prevent live switching.

I can't believe this is an isolated problem - perhaps other VPCZ1 users may be able to help?

I presume you have looked for errors in Event Viewer?