Launchpad automatically added the link to his comment, but he was
referring to the upstream bug report you linked. The proper method to
disable it is radeon.modeset=0, I was under the impression "nomodeset"
was an i915 specific option. this bug is fixed with linux-image-2.6.31-2
because the default option for radeon KMS is disabled now.
** Changed in: xserver-xorg-video-ati (Ubuntu)
Status: New => Fix Released
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[karmic] Modesetting Xorg does not respect 'nomodeset' option
https://bugs.launchpad.net/bugs/395316
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