Thanks Paganini. That was good constructive advice, only the card is 512 Mb and 
max setting in my BIOS is 256mb.
Anyway, it did enhance the overall performance a bit but unfortunately it 
didn't solve my main problem - it only puzzled me further!

After updating from 7.10 to 8.04, in my GRUB boot menu, I have two
entries for Ubuntu 8.04: kernel 2.6.22-14-generic and 2.6.22-16-generic.

And of those two, I'm only able to boot normally, sort of, into
2.6.22-14-generic and I can even enable the restricted ATI driver and
reboot into this same kernel, now without any black screen - but it
seems like the card isn't doing much good.

When I go for 'Appearance' to turn 'Extra' on under Visual Effects, the
screen turns all white! Fortunately, I'm able to guess what to do to go
back to the None setting.

What's going on.,..????

-- 
fglrx - gutsy - ati: Black Screen with ATI RV535 [Radeon X1650 Series] 
[1002:71c7]
https://bugs.launchpad.net/bugs/146515
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