No it will not. It will detect and set it up properly, but
only for 2D. To get 3D, search through Synaptic for the ATI drivers, install them, and then there is a shell script you run which will generate a proper xorg.conf.
ATI released new drivers after the release of Ubuntu 5.04 that are much improved, you can grab these if you wish directly from ati.com.
The alternative is to just buy an Nvidia card
They work much better under Linux.