With radeon.modeset=1 as a kernel parameter (default on Lucid) the
memory usage is normal.

However, the same setting on the previous ubuntu version results in a
highly unstable system that might freeze (completely) anytime flash or
graphic intensive apps are working.

Since on the current version things are fine I'll mark this as 'Fix
Released'

** Changed in: xserver-xorg-video-ati (Ubuntu)
       Status: Incomplete => Fix Released

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High virtual memory usage (~350m) with radeon driver
https://bugs.launchpad.net/bugs/498380
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