I noticed a similar problem using 8.04, when in a terminal and pushing a down 
arrow when at the bottom, or left when at the left edge of the characters.
I had recently installed a wacom tablet, and having had trouble with "pad" 
before decided to take this out of my xorg.conf
And it solved the issue, I don't know wheat the pad input does, am sure I can 
live without it

---------------------------------<cut
# Section "InputDevice"
#       Driver          "wacom"
#       Identifier      "pad"
#       Option          "Device"        "/dev/input/wacom"
#       Option          "Type"          "pad"
#       Option          "USB"           "on"
# EndSection

------------------------------<cut

Section "ServerLayout"
        Identifier      "Default Layout"
  screen 0 "Default Screen" 0 0
        Inputdevice     "Generic Keyboard"
        Inputdevice     "Configured Mouse"
        Inputdevice     "stylus"        "SendCoreEvents"
        Inputdevice     "cursor"        "SendCoreEvents"
        Inputdevice     "eraser"        "SendCoreEvents"
   # Inputdevice "pad"
EndSection

-- 
gdm_slave_xioerror_handler: Fatal X error
https://bugs.launchpad.net/bugs/152648
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