Do you have an AGP system? If so, does it help if you try some different 
AGPMode values? (1,2,4,8)
Please check https://wiki.ubuntu.com/X/Quirks#ATI%20AGP%20Mode%20Quirk and 
report back if it helps.

Also, if you can, please check if you can reproduce this on Ubuntu
Karmic.  LiveCD's of the alpha-3 release are available from
http://cdimages.ubuntu.com/

** Changed in: xserver-xorg-video-ati (Ubuntu)
       Status: Confirmed => Incomplete

-- 
[HD 3650] Xorg hangs for ~1 minute frequently
https://bugs.launchpad.net/bugs/349019
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which is subscribed to xserver-xorg-video-ati in ubuntu.

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