I think the driver you need is "r128" and not "ati". This is
what I have my driver section for TiBook:
Section "Device"
Identifier "ATI Rage 128 M3 (Mobility)"
#Option "NoAccel"
#Option "SWcursor"
#Option "HWcursor"
#Option "Dac6Bit"
#Option "Dac8Bit"
Option "UseFBDev"
#Option "power_saver"
Driver "r128"
BusID "PCI:0:16:0"
EndSection
-- Blake
Section "Device"
Identifier "Generic Video Card"
Driver "ati"
VideoRam 8192
Option "AGPMode" "1"
Option "UseCCEFor2D" "false"
BusID "PCI:0:16:0"
Option "UseFBDev" "true"
EndSection
