I am posting to say that the same has just started to happen on my system.
I just noticed it today, although my last major update was about a week ago, 
when I also installed the new banshee-1 player.
The problem appears as stated above, on either banshee-1 (which I was using 
when I noticed it) totem, and vlc.
I have metacity composite enabled. Cannot deal with compiz. I have the dreaded 
Sis card.
If I disable compiz, then everything works fine.
This problem doesn't seem to affect Mplayer though, which displays videos 
sharply whether composite is enabled or not.
Is there a difference in the way mplayer draws video vs totem/vlc/banshee-1?

Attached, fine my lspci


** Attachment added: "lspci.txt"
   http://launchpadlibrarian.net/16352179/lspci.txt

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video playback artifacts when composite manager is enabled
https://bugs.launchpad.net/bugs/218322
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