Registered: Feb 2006
Location: Kalamazoo, Michigan, in what used to be the USA
Distribution: (Ex-Ubuntu due to Unity), Debian Squeeze, Bodhi w/ E-17 "Stable", MacPup525, Legacy (TeenPup) Live
About ATI card problems and big desktop...
I have an older ATI Radeon card, but I had problems with running two screens for a big desktop using the ATI proprietary legacy drivers, after upgrading to Ubuntu Jaunty 9.04. After googling about for entirely too long, I found that ATI's legacy driver (for my card), Catalyst 9.3, will not work with the very latest XRandR, which is what Jaunty has. ATI has no plans to upgrade, either. Supposedly, their newer driver, 9.7 I think, will work with Jaunty, (and hypothetically with your newer card), but I suspect that they are still getting the bugs out as they adapt to the newer versions of XRandR, and to the new file system, ext4, both of which are coming online with the Jaunty distro, at the same time. I'm given to understand that XRandR is really what is handling the config issues these days, and that xorg.conf is becoming a dinosaur. Unfortunately, XRandR is more of a black box than xorg.conf.
If you are running Jaunty, then you might try the open-source "Radeon" drivers; I had no choice. You can do it all from System > Administration > Synaptic Package Manager. You'll need to check the boxes for "xserver-xorg-video-ati", and for "xserver-xorg-video-radeon". You may have to uninstall the proprietary drivers (listed in Synaptic as xorg-driver-fglrx), but Synaptic may give you that option when installing the open-source drivers, can't remember, sorry.
You could also try using the Envy program, also available from the repositories through Synaptic. ("envyng-core") This is a fully-automated video driver installer for Nvidia and ATI cards, and works very well. A few times, I've seen people fix video card problems just by letting Envy do a re-install for them. Again, you may have to uninstall the drivers you have, first.
The open-source drivers seem to work fairly well, and I can get a big desktop setup. I have a problem with the persistence of that configuration, but hopefully XRandR updates will eventually arrive that cure it. This has happened to me a few times in the past with newest-distro problems in Ubuntu, so it's not a desperate hope. Basically, I think that ATI needs time to catch up to all the recent changes in Ubuntu, especially since they won't release any source code to let the open-source community build them a driver. Hopefully, the next version of Catalyst will catch them up, but honestly, if I were buying a video card for Linux these days, I'd get an NVidia; they seem to work better with Linux, on average.
So, I'd suggest trying out the open-source radeon driver, (it configures using System > Preferences > Display; don't forget to uncheck the "mirror screens" box!) Anyway, I hope any of this is helpful. Good luck!