Please try daily mainline-ppa
https://wiki.ubuntu.com/KernelTeam/MainlineBuilds and you will need a
special firmware
http://xorg.freedesktop.org/wiki/radeonBuildHowTo#TroubleshootingExtraFirmwareforR600.2BAC8-R700

This sounds like null pointer deference in init failure path that was
fixed in 2.6.33-rc7 or rc8. Also firmware loading problem might be fixed
in newer kernel.

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[lucid] HD3200 intermittently does not start, resulting in low-graphics mode
https://bugs.launchpad.net/bugs/521260
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