  We present a detailed analysis of the modulational instability (MI) of
ground-state bright solitary solutions of two incoherently coupled nonlinear
Schr\"odinger equations. Varying the relative strength of cross-phase and
self-phase effects we show existence and origin of four branches of MI of the
two-wave solitary solutions. We give a physical interpretation of our results
in terms of the group velocity dispersion (GVD) induced polarization dynamics
of spatial solitary waves. In particular, we show that in media with normal GVD
spatial symmetry breaking changes to polarization symmetry breaking when the
relative strength of the cross-phase modulation exceeds a certain threshold
value. The analytical and numerical stability analyses are fully supported by
an extensive series of numerical simulations of the full model.
