This worked for me:

1. Start Restricted Driver Manager
2. Enable the Proprietary drivers for your graphics card. DO NOT RESTART when 
prompted to do so
3. Press <Ctrl><Alt><Bkspace>

X will restart and use graphics drivers

4. Select required resolution
5. Install Ubuntu and have fun.

-- 
800x600 resolution with ATI card on live boot makes install difficult
https://bugs.launchpad.net/bugs/154142
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Bugs, which is the bug contact for Ubuntu.

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