I'm also experiencing the same issue with the following messages in xorg.0.log:
"RADEON(0): [agp] AGP not available"
"RADEON(0): [agp] AGP failed to initialize. Disabling the DRI."
"RADEON(0): [agp] You may want to make sure the agpgart kernel module is loaded 
before the radeon kernel module."

I found that enabling the Control + Alt + Backspace option to restart
the X server followed by pressing Control + Alt + Backspace allowed me
to log back into Ubuntu with 3D acceleration working second time round.
As this requires logging in twice I will probably try the other work
arounds mentioned above but a proper fix would be appreciated.

-- 
Radeon module loaded before agpgart
https://bugs.launchpad.net/bugs/468413
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