This is fixed by upgrading kernel to 2.6.33-020633rc8-generic. Just finished
testing with compiz and some extensive 3D work for the last 20 hours since when
this machine has been running on. Once again, just to note, this was for XPS
1645 with ATI Radeon HD 4670. BTW, an earlier version of 1645 laptop with
Radeon 3670 has no issue with X, compiz or 3D at all with Lucid's default
kernel 2.6.32 something.
Hopefully, it'll help people out there!
Cheers.
** Changed in: xserver-xorg-video-ati (Ubuntu)
Status: Won't Fix => Fix Committed
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Xorg freeze lucid daily build ATI Mobility Radeon HD 4670
https://bugs.launchpad.net/bugs/568103
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