I had the same bug on my Inspiron 1525 laptop with an Intel GM965/GL960 card.
I am suspicious that this is due to the Virtual screen size in the graphics 
card being set to 8192x8192
Previously I have always set this to a maximum of 2048x2048 or less in 
xorg.conf, to prevent running out of memory on the card and getting corruption.
However these settings seem to be ignored on Karmic; with the following 
configuration:
Section "Screen"
        Identifier "Screen0"
        Device     "Card0"
        Monitor    "Monitor0"
        SubSection "Display"
                Viewport   0 0
                Depth     24
                Virtual    2048 2048
        EndSubSection
EndSection

I still get this:

dav...@golg:~$ xrandr
Screen 0: minimum 320 x 200, current 3200 x 1080, maximum 8192 x 8192

(Note that my boot up resolution is smaller, at 1280x800, so that's not
what's adjusting the maximum)

** Also affects: xserver-xorg-video-intel
   Importance: Undecided
       Status: New

-- 
broken menus at Ubuntu Linux 9.04/9.10 with intel-2.8.1/2.9
https://bugs.launchpad.net/bugs/426417
You received this bug notification because you are a member of Ubuntu-X,
which is the registrant for xf86-video-intel.

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