I had the same experience on my computer with a 4850. For some reason
xorg.conf isn't being updated to the new virtual screen size. If that
setting is written elsewhere, then it's not being used.
** Changed in: gnome-control-center (Ubuntu)
Status: New => Confirmed
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gnome-display-properties does not edit xorg.conf virtual desktop correctly in
karmic for dual head
https://bugs.launchpad.net/bugs/438715
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