Also experiencing a similar problem.  I'm on an MBP purchased in
December '06 with at ATI x1600 card on it.  Xorg doesn't work at all
(safe graphics mode fails as well).  Xorg claims the vesa driver
couldn't find any usable modes (I believe Feisty had this problem).  To
get the live CD to boot, I had to do this:

1.  Press Fn + Ctrl + Alt(Option) + F1 to get to a usable terminal
2.  Type sudo -s to get to root
3.  apt-get update
4.  apt-get install xorg-driver-fglrx
5.  aticonfig --initial
6.  /etc/init.d/gdm restart
**Unfortunately, this leaves me with a white screen after looking like it's 
going to boot so I had to do more
7.  Get back to the terminal
8.  killall compiz.real
9.  Go back in to my display (Fn+Ctrl+Alt+F8)
10.  Go to System > Preferences > Appearance
11.  It will show the visual effects as disabled.  Turned them on. Screen goes 
white.
12.  After a few seconds, screen comes back with visual effects off, but the 
window manager is running now.
**I'm sure there is a better way to do this (metacity --replace?)  I also had 
no trackpad support so I had to plug in a USB mouse.

Hopefully the vesa driver gets worked out before the official release...

-- 
[Hardy] bulletproof xorg fails completely with mbp rev3
https://bugs.launchpad.net/bugs/196242
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