It certainly kills performance for me. glxgears goes down from 1200 to 30 !!!
(I know that it is not a scientific measure, but it does reflect the dramatic 
change of feel.)
maybe there is another option which would fix the problem without killing 
performance.

b.t.w. there is another bug which seems to be the same as this:
https://bugs.launchpad.net/ubuntu/+source/xorg/+bug/440904

-- 
Notification and similar dialogs are displaying corrupted after update on Karmic
https://bugs.launchpad.net/bugs/416001
You received this bug notification because you are a member of Ubuntu-X,
which is the registrant for xserver-xorg-driver-ati.

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