I have the same issue with using the xserver-xorg-video-intel driver in
Ubuntu 7.04. Last night I changed drivers and just noticed this issue on
my laptop. I have changed back to the xserver-xorg-vide-i810 along and
using 915resolution to get 1280x800 on my screen, which is a work
around. The  reason I tried changing to this driver is because using
i810 only gave me two choices for changing resolution in Gnome.

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totem crashes with 'BadAlloc (insufficient resources for operation)' when using 
compiz and xserver-xorg-video-intel driver
https://bugs.launchpad.net/bugs/111257
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