I can confirm this Bug. Desktop effects don't work anymore.

Hardware:
- ThinkPad T60, ATI X1400 with radeon driver
- ThinkPad X200, Intel 4500MHD

Software: Ubuntu 10.04 with all updates, Kernel 2.6.32-34 amd64

The offending package is xserver-xorg-core 2:1.7.6-2ubuntu7.8. After
downgrading to 2:1.7.6-2ubuntu7.6 everything is back to normal.

Regards, Thomas

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https://bugs.launchpad.net/bugs/877905

Title:
  After upgrading Xserver video does not work properly

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