You could 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/

-- 
[fglrx] Ati x1600Pro White screen on activating compiz
https://bugs.launchpad.net/bugs/196900
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