If you have the time, once you changed the card, you could also test the latest 
Jaunty Alpha LiveCD (shipping a newer X server) from:
http://www.ubuntu.com/testing
(or the latest LiveCD of currenty jaunty from:
http://cdimage.ubuntu.com/daily-live/
)
also using the updated xserver-xorg-video-radeon driver from (install the new 
driver from the LiveCD and restart X):
https://edge.launchpad.net/~xorg-edgers/+archive

If still doesn't work, attach the Xorg log file (eventually from both
8.10 and jaunty)

Thanks!

-- 
Visual effects on Radeon X300 RV370 5B60
https://bugs.launchpad.net/bugs/156905
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