I'm seeing this with large videos (well, I believe that the cause of the
poor visual quality is that xv isn't being used).  I have an ATI 7500 in
a T30 using the opensource drivers. The same videos worked fine in Edgy
yesterday before I upgraded to feisty. The videos I've got are, for
example, AVIs @ 640x272.

Daniel Robitaille mentioned the problem on the sounder list:
https://lists.ubuntu.com/archives/sounder/2007-February/009841.html

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[totem-gstreamer] Totem video output doesn't use xv
https://launchpad.net/bugs/80820

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