After upgrading to Ubuntu 9.04, i would get a scrambled screen and a freeze after X starts. It was still possible to SSH to the machine, but it didn't react to the keyboard. I have an ATI Radeon HD2350. I had problems with earlier versions of Ubuntu, but my friend Google really didn't give me much hope. (I'll never ever buy something with an ATI card in it again!)
I found a fix here, and it consisted of installing envyng-core and running envyng -t ro remove all ati drivers. That was all i had to do to get a normal login screen.
Update: After several issues with this graphics card (system freezes, faulty colours after user switching, never works out of the box) i ditched it. I'm in nVidia heaven now.