There seems to be a new problem - the kernel is currently screwed when
using KMS.  It won't even boot.  I think this is the problem you were
hitting 2blue.  A serious regression just at the end of testing.  I
don't think 12.10 should be released in this state.....you can only
stretch workarounds so far.....

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https://bugs.launchpad.net/bugs/1058641

Title:
  "No devices detected" radeon regression

Status in “xserver-xorg-video-ati” package in Ubuntu:
  Confirmed

Bug description:
  Testing the quantal daily/live ISOs I've noticed a regression with the
  radeon driver.  The last ISO I tested was from the 19th of Sept and
  that was fine.  Yesterdays live/desktop ISO (28/9/2012) fails to start
  the Xorg server.  It reports that no devices are detected.  Creating a
  very simple xorg.conf overcomes the problem:

  Section "Device"
  Identifier "Card0"
  Driver "radeon"
  BusID "PCI:0:16:0"
  EndSection

  I'll attach the Xorg.0.log from running with and without the above
  xorg.conf.

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