Forwarding this bug from Ubuntu reporter Markus:
http://bugs.launchpad.net/ubuntu/+source/xserver-xorg-video-ati/+bug/392531

[Problem]
Black screen with artifacts/corrupted mouse pointer after boot on R580

[Original Description]
When booting from the install CD, a black screen with artifacts is shown after the startup progress bar (when Gnome or GDM should be displayed). The mouse cursor is movable but garbled.
Switching to terminal with Ctrl + Alt + F1 is not possible.

Starting with the vesa driver (Save graphics mode on install CD) works fine.

I installed with safe graphics mode but when I revert to the Radeon driver (by deleting /etc/X11/xorg.conf) the same problem arises.

I have a Sapphire Radeon X1900 GT graphics card (with a R580 chip).

The problem was also in Ubuntu 8.10 and 9.04.  I downloaded the newest (14.07.2009) Karmic iso with kernel 2.6.30-8 but I still get a black screen when booting from the CD. After I installed with save graphics mode and removed xorg.conf I again get a black screen with a garbled mouse pointer.

After doing a dist-upgrade (kernel 2.6.31-2) I tested with the options
  Option "DRI" "off"
  Option "NoAccel" "true"
  Option "AccelMethod" "XAA"
but they had the same effect as above.

Architecture: amd64
Date: Fri Jun 26 14:51:13 2009
DistroRelease: Ubuntu 9.10
MachineType: MICRO-STAR INTERNATIONAL CO.,LTD MS-7238
Package: xserver-xorg-video-radeon 1:6.12.2-2ubuntu2
ProcCmdLine: BOOT_IMAGE=/boot/vmlinuz-2.6.30-10-generic root=UUID=135860d2-32aa-487e-a08e-1805abb0e48a ro single
ProcEnviron:
 PATH=(custom, no user)ProcVersionSignature: Ubuntu 2.6.30-10.12-generic
RelatedPackageVersions:
 xserver-xorg 1:7.4~5ubuntu21
 libgl1-mesa-glx 7.4.1-1ubuntu6
 libdrm2 2.4.11-0ubuntu1
 xserver-xorg-video-intel 2:2.7.99.1+git20090602.ec2fde7c-0ubuntu2
 xserver-xorg-video-ati 1:6.12.2-2ubuntu2
SourcePackage: xserver-xorg-video-ati
Uname: Linux 2.6.30-10-generic x86_64
XorgConf: Error: [Errno 2] No such file or directory: '/etc/X11/xorg.conf'
Xrandr: Error: command ['xrandr', '--verbose'] failed with exit code 1: Can't open display
dmi.bios.date: 12/01/2007
dmi.bios.vendor: American Megatrends Inc.
dmi.bios.version: V1.8
dmi.board.asset.tag: To Be Filled By O.E.M.
dmi.board.name: MS-7238
dmi.board.vendor: MICRO-STAR INTERNATIONAL CO.,LTD
dmi.board.version: 1.0
dmi.chassis.asset.tag: To Be Filled By O.E.M.
dmi.chassis.type: 3
dmi.chassis.vendor: MICRO-STAR INTERNATIONAL CO.,LTD
dmi.chassis.version: 1.0
dmi.modalias: dmi:bvnAmericanMegatrendsInc.:bvrV1.8:bd12/01/2007:svnMICRO-STARINTERNATIONALCO.,LTD:pnMS-7238:pvr1.0:rvnMICRO-STARINTERNATIONALCO.,LTD:rnMS-7238:rvr1.0:cvnMICRO-STARINTERNATIONALCO.,LTD:ct3:cvr1.0:
dmi.product.name: MS-7238
dmi.product.version: 1.0
dmi.sys.vendor: MICRO-STAR INTERNATIONAL CO.,LTD
glxinfo: Error: command ['glxinfo'] failed with exit code 255: Error: unable to open display
setxkbmap: Error: command ['setxkbmap', '-print'] failed with exit code 255: Cannot open display "default display"
system: architecture:       x86_64kernel:             2.6.30-10-generic
xdpyinfo: Error: command ['xdpyinfo'] failed with exit code 1: xdpyinfo:  unable to open display "".
xkbcomp:
 Error: command ['xkbcomp', ':0', '-w0', '-'] failed with exit code 1: Error:            Cannot open display ":0"
                   Exiting