I have the same issue after upgrading to 7.10 Gutsy (final release)
today. I have not tried the method that michelle suggested above
(https://bugs.launchpad.net/ubuntu/+bug/148221/comments/4 ). I could try
it if/when I have time to do all of that. I am surprised, though,
because it sounds like you can run visual effects _without_ the
restricted ATI driver after all  -- so why use this driver? And why does
Gutsy recommend so strongly that you install it after you do the main
system upgrade?

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composite extension not enabled
https://bugs.launchpad.net/bugs/148221
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