I have the same problem here with Radeon 9550. I fixed it by booting
with Live CD, chroot to my root partition and aticonfig -f --initial
--overlay-type=Xv.

The annoying thing is that sometimes KDE loses its screen resolution
settings, jumps to highest possible (i.e. unusable) resolution and when
I change back in System Settings, a broken xorg.conf is generated again.

I attach kdm.log, the broken xorg.conf and working xorg.conf.

** Attachment added: "Log from broken config"
   http://launchpadlibrarian.net/11451871/kdm.log.1

-- 
X does not start after 8/22 fglrx update 
https://bugs.launchpad.net/bugs/134180
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