Can you try 7.10? The hangs are normally bugs in the driver, in this case ati.
** Changed in: xserver-xorg-video-ati (Ubuntu)
Sourcepackagename: xorg => xserver-xorg-video-ati
Status: New => Incomplete
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xorg busy-hangs in ooffice save dialog
https://bugs.launchpad.net/bugs/152992
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