premavilas,
I wrote a short HowTo with explanation on the Ubuntu Forums, you can access it 
here: http://ubuntuforums.org/showthread.php?t=764633

grahams
With the older ATI cards, you cannot be using the fglrx drivers, they only work 
for the 9500 and newer I believe.  You need to be using the open source ati 
drivers.

As per the original bug report, I believe the Screen and Graphics
function does not exist in the final release of Hardy Heron.  You need
to change resolution from System->Preferences->Screen Resolution

There is a program built into Hardy called xrandr.  I heard about a GUI
for it, I think it's called grandr and is available in the repositories.
You can try downloading and installing that to see if it help with the
resolution problems.

-- 
Screen resolution issues in Hardy with Radeon Mobility 7500
https://bugs.launchpad.net/bugs/160871
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