Sorry for the delay but I think I've finally got to the bottom of this
issue... It was a dieing graphics card. The problem only manifested when
using 3D features which is why it started when I used Unity instead of
gnome but the problem happened on all graphics accelerated functions,
including when trying the same things in a dual boot windows install.
Changing the graphics card has fixed all of the problems. Apparently
this is  fairly widely experienced problem with Nvidia GeForce 7900 GS
cards.

Thanks all for your patience and help.

** Changed in: nvidia-drivers-ubuntu
       Status: Incomplete => Invalid

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https://bugs.launchpad.net/bugs/757486

Title:
  [NVIDIA] Severe visual distortion in Unity3D, Unity2D and Gnome Shell

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