i confirm too.
i have a "ATI Technologies Inc Radeon XPRESS 200M 5955 (PCIE)" on a HP 
pavillion dv5000.
When i try the alpha 6 live cd (also present on alpha 5 and 4) I also get:
When it boots from the Hardy Live-CD's (32 or 64 bit) it will get to the point 
where it tries to load compiz and then fails. When it fails it kicks back to 
GDM, auto logs in, fails on compiz and back to GDM.

If i then try to go into tty2 to diagnose the screen mangles, the image
you were currently looking at in x is left frozen on the screen, with a
mild distortion on a few pixels, and  the mouse is locked. In fact no
futher update to the screen happen, except for a few random pixels in
the top left changing a little as you switch between the tty's. In
conclusion it is completely knackered.

Anyway, on the live cd boot screen, i change to just "install ubuntu"
(so that ubiquity would come up, ie without compiz), and disabled the
splash screen. Then when ubiquity was running doing nothing, i was able
to switch to tty2 and look around (as compiz hadnt kicked in and broken
everything). if i do sudo apt-get remove compiz-core then, i can get
sucessfully onto the desktop, by just cancelling ubiquity and waiting
for gdm to restart (well metacity isnt running, but i can just run that)

when i was on feisty and gutsy i was able to get compiz running with the
official ati driver (fglrx) installed through the restricted drivers
manager, and then installing xgl.  so the xpress 200m shouldnt be
blacklisted completely, if xgl and fglrx are running, then compiz should
attempt to work

for the above poster: "Once fglrx is installed and I reboot I can log
into my GNOME session no problem.", this is because fglrx is
blacklisted, right?, you could equally just remove compiz.

however, i find that running compiz by hand, compiz still tries to run
and breaks everything. so for me at least it looks like a simple fix of
blacklisting the card (but not blacklisting with xgl)

-- 
need to blacklist xpress200m when using ati driver
https://bugs.launchpad.net/bugs/197135
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