I have EXACTLY the same issue on a Dell C640. I attached this snapshot
in another bug report. This is also a security issue because the
screensaver (shown) does not cover the whole screen, even when "locked,"
allowing access to files outside of the area that Ubuntu "thinks" is the
full-screen area - i.e., the area delineated by the top and bottom
panels in your photo, and by the screen saver in fullscreen preview mode
in this photo. Some people are reporting that there is a blank window in
movie players when playing videos. I also have that problem - the
picture doesn't "appear" unless I drag the window OUTSIDE of the panels
shown. If someone doesn't have an external monitor supporting a larger
resolution, they would not even have that option. This is a serious
problem and it occurred after upgrading from Feisty to Gutsy on my
laptop. Interestingly, it does the same thing with both a clean install
AND with running from the liveCD. I never had this screen geometry
problem with Feisty.

** Attachment added: "Screenshot-1.png"
   http://launchpadlibrarian.net/10150093/Screenshot-1.png

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[gutsy] ati open source driver issues with external monitor
https://bugs.launchpad.net/bugs/156550
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