ATi has gotten much better Linux support, but there is still much to be desired. Kernel upgrades pushed through the update manager tend to destroy the ATI kernel module. I’ve found the quickest, most painless way is to simply uninstall and then reinstall the drivers:
Download the latest drivers from the ATI site: 32-bit and 64-bit <http://support.amd.com/us/gpudownload/linux/Pages/radeon_linux.aspx>.
Open a terminal in the directory with the downloaded file (note: your exact file name may be different):
sudo chmod +x ati-driver-installer-10-2-x86.x86_64.run sudo ./ati-driver-installer-10-2-x86.x86_64.run
Install the drivers, restart the computer and type the following into a terminal:
sudo aticonfig -f --initial
Then restart X (Ctrl+Alt+Backspace) or restart the computer and all will be well!
Update: If you experience black or grey screen artifacts in Firefox/Thunderbird using Catalyst 10.6 or higher, it may be due to the new 2D rendering system. To force use of the old XAA system run the following command after the initial aticonfig setup:
sudo aticonfig --set-pcs-str=DDX,ForceXAA,TRUE
Restart X, and all should be well!