Comment 2 for bug 513956

I'm fairly certain this is the well-known "screen corruption with XAA". Indeed, EXA was made to replace XAA specifically because of bugs like this.

So the real bug here is why is your system using XAA rather than EXA, and that I believe is because in certain circumstances EXA has severe problems, and so EXA is being quirked off in these cases. One situation is where the video memory is too low. You can try forcing EXA via the AccelMethod option. If it turns out that EXA works fine on your hardware, perhaps the quirk can be adjusted to not be employed in that case. If EXA does not work right, than probably we should focus efforts on *that* issue, since it is extraordinarily unlikely anyone will be fixing this problem with XAA at this point.

This quirk is a fairly recent thing. In Jaunty we (Ubuntu) forced all ATI hardware to use EXA. I don't recall whether the quirk to use XAA appeared in Karmic or only on Lucid, but this may explain why you see this as a regression.

Alternatively, compiz could be quirked to not work for this graphics card. I don't care for that option since it really just sweeps the bug under the carpet, but it is something which could be considered if we get down to release and the underlying issues haven't been resolved.