As the above two comments say this bug has been resolved in Ubuntu 8.10,
so this bug could be closed.
** Changed in: xserver-xorg-video-intel (Ubuntu)
Sourcepackagename: None => xserver-xorg-video-intel
Status: New => Fix Released
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Ubuntu 8.10 Live CD--Ubuntu is Running in Low Graphics mode
https://bugs.launchpad.net/bugs/279759
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