I can confirm this is still an issue with Ubuntu 10.10 x64 and ATI/AMD
Proprietary FGLRX graphics drivers installed.

Linux brutus 2.6.35-25-generic #44-Ubuntu SMP Fri Jan 21 17:40:44 UTC
2011 x86_64 GNU/Linux

With Visual Effects enabled, I get no client-side visual refresh from
VNC (using ubuntu's built-in vino server) although commands are being
processed. With Visual Effects set to None, it seems to work fine.

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https://bugs.launchpad.net/bugs/353126

Title:
  Compiz / vnc screen refresh with nvidia-restricted
  driver/VirtualBox/ATI fglrx driver using X.org

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