For me, the problem also persists on my Thinkpad X32 (ATI mobility radeon 16mo) 
with Ubuntu 10.10 Beta with all updates.
Like this picture http://launchpadlibrarian.net/44401636/DSC00390.JPG

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Lucid: garbled video at boot on radeon 7xxx cards: bad color map due to 16-bit 
fb
https://bugs.launchpad.net/bugs/564471
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