I have temporary fix.  by either using a 8.04 version live cd
(http://samaritan.ucmerced.edu/ubuntu-releases/cd/) or windows with
ext2ifs.exe (http://www.fs-driver.org/) installed, place this driver
ati-driver-installer-8-11-x86.x86_64.run (here:
http://ati.amd.com/support/drivers/linux/linux-radeon.html) and place it
into the /home/(user login)/ directory.

at the grub prompt select recovery mode.  Select root console, cd to "CD 
/home/(user Login)
dir to list the file
sh ./ati-driver-installer-8-11-x86.x86_64.run.  answer prompts. use automatic. 
upon completion. type

aticonfig --initial

after confirming dialog. exit and boot.
Will have ati console running an proper graphic.

BUT!
Upon updates from ubuntu.  Driver will be unabled.
at least this time it boots up and says graphic in low mode boot into or try 
and fix.

boot into system run console type sudo aticonfig --initial.  Will reconfigure.  
reboot.
hopefull no more update cause problems........

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