In my case, 6.10 live also works fine while 7.04 fails. I have realized
lspci reports a different device:

Booting from a 6.10 CD, lspci reports:
00:14.2 Audio device: ATI Technologies Inc Unknown device 437b (rev 01)

While 7.04 reports:
00:14.2 Audio device: ATI Technologies Inc SB450 HDA Audio (rev 01)

There is also a relevant thread in the forum:
http://ubuntuforums.org/showthread.php?t=415821

Regards,
Julian

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Sound does not work for ATI SB450 HDA
https://bugs.launchpad.net/bugs/103379
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