Only DRI will use AGP transfers, so if DRI is disabled is does not
matter what AGPMode you are setting. DRI is used for 2 things, 3D
hardware acceleration (mesa libraries) and EXA 2D acceleration (in
driver). Without DRI, 3D graphics will be software rendered, and EXA
will be terribly slow. In Karmic, the driver will switch to XAA if there
is no DRI.

I would be curious to see if the memory allocation is different in
Karmic. Do you have two monitors connected, and a virtual desktop
spanning both?

-- 
[Needs AGPMode quirk] Freeze with ati driver during boot on 8.10
https://bugs.launchpad.net/bugs/296617
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