Everybody knows that my mouse has a habit of dieing. But now when it dies for a second the whole screen goes black. What could be the problem?

Probably a faulty connection (if not a general fault with the mouse); if not inside the mouse or mouse cable then within the PC.

It's probably the mouse's fault... if it actually keeps dying you should get a new one...

Your mouse is possesed, it is halloween after all

did you use a wet paintbrush again?

You will never let me forget that, now would you?

I forgot to say that it happened after I installed the new nVidia graphics drivers. so...

Whatever it didn't happen anymore after I restarted the computer so let's hope it says that way.

Was Telgor anywhere near your mouse?

Nope, problem still there. The red light turns off then screen goes black for half a second then back on along with the red light.

Aliens.
Could be your USB port being wonky. Something similar was happening to me once. My joystick was crap and broken and would occasionally stop functioning altogether. When this happened the sound would occasionally cut out for a little while. Apparently my USB port was borked along with the joystick, and somehow screwed up my sound card. I didn't try to find out how exactly this happened because i have extreme Xenophobia, but there you go. Try checking out your USB ports, is what i'm saying here.

Well, it didn't happen before the driver update so I might blame that. Considering it is that how can I rollback?

I know of only one way to downgrade your drivers, but please use this as a last resort and VERY carefully. Go here and download the program. It lets you uninstall your drivers, which you do on your malfunctioning driver. Use a guide so you don't muck anything up. Once done, just download an older driver and you're good. But, as i've said, please use this as a last resort, as it can really screw you up if done improperly. Also, the good version of the program costs money so you might want to really rent it, if you catch my subtle hint.
Again, please use this only if nothing else works or if you can't find the problem. I've seen bad things happen because someone used this thing improperly. It's better to have a slightly broken computer than a brick full of electronics.