*** This bug is a duplicate of bug 346028 ***
    https://bugs.launchpad.net/bugs/346028

I'm not sure if this is your problem, but see Bug #346028 and Bug
#285603.

Maybe try this:

Michael Vanderheeren wrote on 2009-03-20: (permalink)

Just recovered my computer from the same problem. The bug is NOT in the
usplash package. it's the AMD ATI driver called fglrx. Instead you
should use for the moment the opensource driver. The following is a
howto:

1. get into recovery mode (when grub loads, press ESC, select recovery mode)
2. choose to get NETROOT from the menu
3. sudo apt-get remove --purge xorg-driver-fglrx
4. sudo apt-get install xserver-xorg-video-ati
4. sudo reboot

Can you attach your Xorg.0.log file and the output from "lspci -vvnn"

-- 
garbage screen with ati driver and Radeon HD 3650 on Jaunty
https://bugs.launchpad.net/bugs/368187
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