Seem same problem on Packard Bell EasyNote R7725.
chipset : ATI RV 350 Mobility Radeon 9600 M10

Ubuntu 10.04 just install. No problem with installation.
Problem occurs after reboot.
logon near impossible. Screen display is corrupt.

In console we have a lot of message :

[drm: radeon_ib_schedule] *ERROR* radeon: couldn't schedule IB (8)
[drm: radeon_cs_ioctl] *ERROR* Failed to schedule IB !

same 2 msgs repeat...

I think it was ok before I enable Compiz 3D effect
These 3D effects were ok until we reboot ...

ps : difficult to provide documentation on this PC due to this problem.

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Freeze with KMS enabled on Radeon RV350
https://bugs.launchpad.net/bugs/561789
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