I can confirm this issue

$ uname -a
Linux stein 2.6.27-4-generic #1 SMP Wed Sep 24 01:30:51 UTC 2008 i686 GNU/Linux
$ lspci | grep VGA
00:02.0 VGA compatible controller: Intel Corporation 82852/855GM Integrated 
Graphics Device (rev 02)

As soon as the Xserver starts the screen gets corrupted. I've got to
add: Because auf bug #274045 the xserver fails to start with the intel
driver. The xserver falls back to the vesa driver and a 800x600
resolution displaying the "let's fix your xserver screen". This causes
the screen to flicker.

** Attachment added: "dmesg.txt"
   http://launchpadlibrarian.net/18109234/dmesg.txt

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[intrepid] screen corruption switching to VT
https://bugs.launchpad.net/bugs/272933
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