I can confirm it's a regression in 2.6.32. Kernel 2.6.31 works well (tested 
with 2.6.31.12).
I hit this bug when I boot into single mode (recovery mode). Text cursor in top 
left corner appears instead of recovery menu. Combination "(CTRL) + Alt + Fx" 
doesn't work, I have to restart using Ctrl + Alt + Delete.
I have no issue in non-single mode. X Windows start and Gnome works well.

I can fix it by parameter radeon.modeset=0 on kernel command line:
-----------
kernel /vmlinuz-2.6.32-16-generic 
root=UUID=5564d628-8fc2-42b9-ba8d-cb1b7937a3e8 ro radeon.modeset=0 single

Used SW:
Ubuntu 10.04, amd64
kernel 2.6.32-16-generic
xserver-xorg-video-radeon: 1:6.12.191-1ubuntu2

-- 
VIA KM400: Black screen after boot, no text console possible
https://bugs.launchpad.net/bugs/518623
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