You might try the latest version of the fglrx driver and see if it fixes
the problem.

Can you enable the hardy-proposed and hardy-updates repositories,
install EnvyNG so as to install the latest release of the driver?

If you can still reproduce the problem then you should report the problem to 
ATI:
http://ati.cchtml.com/

** Changed in: linux-restricted-modules-2.6.24 (Ubuntu)
       Status: Triaged => Incomplete

-- 
[fglrx] Using fglrx causes excessive hardware interrupts and an extremely slow 
system
https://bugs.launchpad.net/bugs/206337
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