Howto: Install Ubuntu With Newer ATI Cards

From: http://pixelcarnage.net/articles/software/

I'll keep this quick, even though it's cost me several sleepless nights. The "ati" driver supplied on the Ubuntu CD doesn't support many of the new ATI video cards, namely the Radeon X* series. This is how you get around it:

1. Boot from the CD and wait for the X server to crash.
2. Press CTRL+ALT+F1 to switch to the console.
3. Type sudo apt-get install xorg-driver-fglrx to download the official drivers.
4. Run dpkg-reconfigure xserver-xorg, keep the defaults, but select "fglrx" instead of "ati" when it asks you what driver to use.
5. Run startx and enjoy the LiveCD as everyone else sees it.

I hope this helps someone.