Public bug reported:

Binary package hint: vlc

I just did a fresh install of Ubuntu 7.10 Gutsy Gibbon, After installing the 
ATI Restricted Driver, the video in VLC became very shaky, and unusable.
Other media players, such as totem worked fine.

I tried adjusting gstreamer-properties which didn't fix the problem.  
I tried doing a complete reinstall of VLC which didn't fix the problem.

Finally I finally found a simple solution:

In VLC goto Settings > (Check Advanced Options) > Goto Video > Output
Modules > and enable X11 or OpenGL output


I recommend that VLC defaults to one of those two options on a new install.  I 
never had a problem like this with a previous release of Ubuntu.

** Affects: vlc (Ubuntu)
     Importance: Undecided
         Status: New

-- 
VLC Shaky video in gutsy w/ ATI card
https://bugs.launchpad.net/bugs/155082
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