I had this problem with lucid and had to put radeon.modeset=0 into grub
to boot. Later, due to lucid breaking after an update (PS disabling
ctrl-alt-backspace in lucid is a bad idea, and even with the
radeon.modeset=0, ctrl-alt-f1 showed vertical bars, so I couldn't get to
a terminal from there to restart the gnome-panels or nautilus), I did a
fresh install without importing any of my old settings and the problem
seemed to go away, even though I still had the vertical bar problem with
the live cd itself. I can only hope that the problem is solved, because
the vertical bars do not always appear on every boot and mostly occur
randomly, and I have not had much of a chance to thoroughly test my
laptop with many boots.

Using the 2.6.33 kernel completely fixed the problem, but wireless was
nonfunctional in that kernel build so I couldn't stick to that.

-- 
[Lucid] ATI KMS causes DRM error on X200M
https://bugs.launchpad.net/bugs/509273
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which is a direct subscriber.

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