A college just updated to karmic.
he has i965GM
Compiz working perfectly on 2048x768 and 2304x1024

So this is only i915/i945 chipset problem.

@Viktor
If I'm not mistaken, "Virtual" line is in KMS mode (default in karmic) 
irrelevant.
Kernel is now managing resolutions, not xserver, and according to hardware 
abilities.

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[i945GM] dual screen not working with virtual resolution enabled: just a blank 
screen with a mouse pointer
https://bugs.launchpad.net/bugs/383345
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