I tested this with Fedora 17 to check if it is Ubuntu-specific but it isn't - 
Fedora behaves similar.
So I filed a bug report with freedesktop.org:
https://bugs.freedesktop.org/show_bug.cgi?id=57027

** Bug watch added: freedesktop.org Bugzilla #57027
   https://bugs.freedesktop.org/show_bug.cgi?id=57027

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https://bugs.launchpad.net/bugs/1075296

Title:
  nomodeset needed for radeon 7000

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