For my case, I think it was related to the proprietary ATI drivers
(fglrx), suggested by Ubuntu after installing. I said go ahead, and
installation failed, but I think it still managed to install enough so
that the proprietary drivers were used after the next boot. That's when
I got the error mentioned in this bug. Using the ATI supplied tools
(amdccc) etc, I was able to extend the desktop, but only using Xinerama.
I have an older ATI card (RV730), which may be related, as I chatted
with another ATI user with a more recent card that claimed he was able
to extend his desktop with amdccc without resorting to Xinerama.

My solutions was to thoroughly clean the system of fglrx (using methods
found through googling) and restart with the open source drivers, when
everything seems to be working fine again (desktop extended - no
problem).

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https://bugs.launchpad.net/bugs/856312

Title:
  Cant set resolution with two monitors

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