I think I have this bug, too. I just upgraded to Interpid. 
Using 1:6.9.0+git20080826.a3cc1d7a-2ubuntu3 (intrepid)
When I went from Hardy to Intrepid, I had to install the ATI driver.  The flgr 
driver disappeared ??

When Intrepid first boots, the display flickers. It tries to display at 
1900x1200 (my monitor's resolution)
Then in between flickers, I have to go into the K launcher and select the 
Display properties. 
The resolution goes to a newer value and then everything is more or less ok. 

The setting disappears after a reboot. I have to go through the process
of resetting the display resolution.

hope this helps!  tia!

lspci -vvnn

01:05.0 VGA compatible controller [0300]: ATI Technologies Inc Radeon HD 3200 
Graphics [1002:9610]
        Subsystem: Giga-byte Technology Device [1458:d000]                      
                  
        Control: I/O+ Mem+ BusMaster+ SpecCycle- MemWINV- VGASnoop- ParErr- 
Stepping- SERR- FastB2B- DisINTx-
        Status: Cap+ 66MHz- UDF- FastB2B- ParErr- DEVSEL=fast >TAbort- <TAbort- 
<MAbort- >SERR- <PERR- INTx- 
        Latency: 0, Cache Line Size: 4 bytes                                    
                             
        Interrupt: pin A routed to IRQ 18                                       
                             
        Region 0: Memory at d0000000 (32-bit, prefetchable) [size=256M]         
                             
        Region 1: I/O ports at ee00 [size=256]                                  
                             
        Region 2: Memory at fdee0000 (32-bit, non-prefetchable) [size=64K]      
                             
        Region 5: Memory at fdd00000 (32-bit, non-prefetchable) [size=1M]       
                             
        Capabilities: [50] Power Management version 3                           
                             
                Flags: PMEClk- DSI- D1+ D2+ AuxCurrent=0mA 
PME(D0-,D1-,D2-,D3hot-,D3cold-)                   
                Status: D0 PME-Enable- DSel=0 DScale=0 PME-                     
                             
        Capabilities: [a0] Message Signalled Interrupts: Mask- 64bit+ Queue=0/0 
Enable-                      
                Address: 0000000000000000  Data: 0000

-- 
Xv displays flickering pixel garbage (intrepid)
https://bugs.launchpad.net/bugs/267297
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