Well I had an updated version of fglrx installed (not from the repos)
which worked fine before this update.

I tried to install from the repos but there were all kinds of errors, it
also would not reinstall.  I have finally managed to force uninstall the
latest driver and reinstall the driver from the repos.  I am now back in
my system, working correctly.

I will avoid the latest fglrx until I can be certain that something in
Ubuntu won't break it during the next update.

It therefore appears that something in xorg-server is incompatible with
fglrx 8.881, in this version of Ubuntu at least.

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https://bugs.launchpad.net/bugs/878235

Title:
  System unusable after update

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