I too experience this bug.  I have an ATI Radeon xpress 200 (RS480), and
when I enable fglrx through the restricted drivers manager, and restart
X, the screen will flicker for several moments and then dump me into
failsafe mode.  I copied my xorg.conf file over from my working Feisty
install, and it works as expected.

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X does not start after 8/22 fglrx update 
https://bugs.launchpad.net/bugs/134180
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