I think the driver you need is "r128" and not "ati". This is what I have my driver section for TiBook:
Section "Device" Identifier "ATI Rage 128 M3 (Mobility)" #Option "NoAccel" #Option "SWcursor" #Option "HWcursor" #Option "Dac6Bit" #Option "Dac8Bit" Option "UseFBDev" #Option "power_saver" Driver "r128" BusID "PCI:0:16:0" EndSection -- Blake
Section "Device" Identifier "Generic Video Card" Driver "ati" VideoRam 8192 Option "AGPMode" "1" Option "UseCCEFor2D" "false" BusID "PCI:0:16:0" Option "UseFBDev" "true" EndSection