Yep, that bug is fixed but not on hardy yet.

I'm not sure what to do with the real problem; why does it fall back to
failsafe. When x-x-v-ati driver supports these chips it'll probably be
"fixed" automatically, but vesa seems to have issues.

** Changed in: xserver-xorg-video-vesa (Ubuntu)
Sourcepackagename: xorg => xserver-xorg-video-vesa

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[ATI X1300] Could not generate /etc/X11/xorg.conf.failsafe
https://bugs.launchpad.net/bugs/174434
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