Could you try installing the package available here:
http://ppa.launchpad.net/tormodvolden/ubuntu/pool/main/x/xserver-xorg-
video-ati/xserver-xorg-video-ati_6.7.194-1ubuntu1tv_i386.deb
and also attach /var/log/Xorg.0.log.
** Changed in: xserver-xorg-video-ati (Ubuntu)
Sourcepackagename: None => xserver-xorg-video-ati
Status: New => Incomplete
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GUTSY. No video output firing up X.
https://bugs.launchpad.net/bugs/144011
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