Rolling back to the following packages resolves the issue for me:

linux-headers-2.6.32-23
linux-headers-2.6.32-23-generic
linux-image-2.6.32-23-generic 

Since 2.6.32-23 works and 2.6.32-24 does not. Is this a regression
introduce by Linux 2.6.32-24 rather than the drivers?

I have done some tests with the results below:

ATI 10.9 + 2.6.32-24 = Error
ATI 10.9 + 2.6.32-23 = No issue
ATI 10.5 + 2.6.32-24 = Error
ATI 10.5 + 2.6.32-23 = No issue
8.723-1  + 2.6.23-24 = Error
8.723-1  + 2.6.23-23 = No issue

-- 
package fglrx 2:8.723.1-0ubuntu4 failed to install/upgrade: fglrx kernel module 
failed to build
https://bugs.launchpad.net/bugs/642518
You received this bug notification because you are a member of Ubuntu-X,
which is subscribed to fglrx-installer in ubuntu.

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