I have this issue on my Dell Inspiron 1525 as well.  I have a few other
graphical issues w/ this Intel card as well.  Marcelo above me had a
good idea about the screencast.  I'm adding mine, and it shows a similar
experience.

http://www.youtube.com/watch?v=UT8x_PGRolU

Here is my lspci:

[EMAIL PROTECTED]:/var/log$ lspci -vn |grep VGA
00:02.0 VGA compatible controller [0300]: Intel Corporation Mobile GM965/GL960 
Integrated Graphics Controller [8086:2a02] (rev 0c)

The other issue I have is that when I boot the machine from cold, or
restart it, X will NOT load.  If flashes a black screen, and then
garbage, and then black, and then black.  I see the hard drive light
blinking so I know its actually loading in the background.  I can press
ctrl-alt-backspace, and then ctrl-alt-delete to get the machine
restarted.  I have to choose "Recovery Mode" in Grub, then choose the
"Resume" option.  Doing it this way, X will load fine, but performance
is terrible.. but it's all I got!

I can reproduce this every time I boot from cold, or restart the
computer.

-- 
Poor graphics performance and rendering errors on Intel GM965 system, Ubuntu 
8.10
https://bugs.launchpad.net/bugs/252094
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