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[Robert Premuz <619365@xxxxxxxxxxxxxxxxxx>]

I also encountered the same problem on newly installed Ubuntu 10.10
(Maverick) x64 on a PC that has Sapphire ATI Radeon HD 4350 512MB DDR2
PCI-E.

uname says:
Linux 2.6.35-24-generic #42-Ubuntu SMP Thu Dec 2 02:41:37 UTC 2010 x86_64 GNU/Linux
dpkg says:
ii  xserver-xorg-video-ati               1:6.13.1-1ubuntu5

The problem usually starts very shortly after the system boots and I'm
not even able to log in. Soon the system becomes unresponsive. If I boot
in recovery mode, I'm able to log in.

Putting nomodeset option in GRUB_CMDLINE_LINUX_DEFAULT solved the
problem.

Another solution I found is explained on https://wiki.ubuntu.com/X/KernelModeSetting . The command for turning off KMS for radeon driver:
# echo options radeon modeset=0 > /etc/modprobe.d/radeon-kms.conf

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https://bugs.launchpad.net/bugs/619365

Title:
  Screen corruption when X starts