My xorg.conf file was blank and always has been, but just to try i did an 
aticonfig --initial which generated this xorg.conf file.
However there was no change in behaviour

** Attachment added: "xorg.conf"
   http://launchpadlibrarian.net/24551261/xorg.conf

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ati fglrx crash on load on ATI 4850
https://bugs.launchpad.net/bugs/349542
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