I have exactly the same problem as it appears on chrisi's screenshot
above, but with an ATI 7500 GPU (R100) on a Compaq Pressario 2800.

$ lspci|grep VGA
01:00.0 VGA compatible controller: ATI Technologies Inc Radeon Mobility M7 LW 
[Radeon Mobility 7500]

$ uname -r
2.6.28-13-generic

Changing font hinting to monochrome, delays the corruption.

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Fonts corrupted on Thinkpad X30 
https://bugs.launchpad.net/bugs/368877
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