This may be the same bug as I had and also bugs 154162, 161215, 147547.

Ubuntu 7.10, Gigabyte GA-MA69GM-S2H with ATI X1250. Could not perform
graphical install, text install appears to hang after reboot. Fixed by
installing latest ATI drivers (8.1 Jan 2008 ) and setting default screen
resolution to 1024x768 in /etc/usplash.conf.

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[rs690] radeonhd driver segfaults - edid problem on x64
https://bugs.launchpad.net/bugs/175822
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