confirmed here, after upgrading to karmic I had a black desktop and no
icons.

enabling kms fixed it (only if I also do update-initramfs after enabling
kms in modprobe.d), but sometimes I notice minor font corruption on some
letters.

DistroRelease: Ubuntu 9.10
PciDisplay: 02:00.0 VGA compatible controller: ATI Technologies Inc RV280 
[Radeon 9200 SE] (rev 01)
RelatedPackageVersions:
 xserver-xorg 1:7.4+3ubuntu7
 libgl1-mesa-glx 7.6.0-1ubuntu4
 libdrm2 2.4.14-1ubuntu1
 xserver-xorg-video-intel 2:2.9.0-1ubuntu2
 xserver-xorg-video-ati 1:6.12.99+git20090929.7968e1fb-0ubuntu1

-- 
(Needs KMS) Background and full screen apps don't show up when Normal Visual 
Effects on (Radeon 7500) 
https://bugs.launchpad.net/bugs/444139
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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