I have something which seems like the same problem. I was using 7.04 
successfully with the ATI binary drivers. Since upgrading to gutsy it doesn't 
work. At the moment I get 1280x1024, but there are screen display errors on 
occasion (localized, e.g. the 'show desktop' button is garbled.) I tried using 
kernel -20-16 instead of -22-13, but without success.
I am attaching lspci -vvnn and /etc/X11/xorg.conf.
Incidentally, running fglrxinfo crashes X.
If there's anything else that would help I'd be glad to give it.

** Attachment added: "xorg.conf"
   http://launchpadlibrarian.net/9859411/xorg.conf

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[RC410] Xpress 200m with pci id 1002:5a62 and Linux 2.6.22 - X will not start
https://bugs.launchpad.net/bugs/144297
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