On up to date Lucid as of 2010-03-09, this is still a problem with no
xorg.conf file (X defaults to XAA).

$ cat /proc/version_signature 
Ubuntu 2.6.32-16.24-generic

-- 
[XAA] garbled screen with compiz but no KMS on ATI Radeon Mobility 7500
https://bugs.launchpad.net/bugs/513956
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which is subscribed to xserver-xorg-video-ati in ubuntu.

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