I'm now running with the latest ATI/AMD Linux drivers, 8.02. You can go to the Ubuntu Gutsy Installation Guide and use Method 2 to install them. I've been installing pretty much every release that's come out, especially all of this year's (2008).
First, the 'bad' news. Starting with 8.01, released in January, AIGLX support is broken. AIGLX experimental support was introduced in 8.42.3 back in November. I installed it then and had issues with that driver and my video card, an ATI X1950 Pro. There were conflicts between OpenGL applications and the Compiz desktop. As a consequence I never bothered to run the fancy desktop. But every time I updated the drivers I tried to enable the visual effects (Compiz) to check if the situation would get any better. In never did. Now, starting with 8.01, any attempts to enable visual effects fails.
Which, frankly, is fine by me. Everything else works flawlessly with the latest drivers, including OpenGL and movie playback. In fact, these drivers have provided the highest levels of performance I've seen so far on my Ubuntu system. Using a very simplistic example, glxgears runs about 5,000 frames/second on my system with 8.02 installed. Booting into a live CD, such as the latest PCLinuxOS Gnome Edition, and then running glxgears produces only 500 frames/second. That's a full order of magnitude difference in performance between the 'free' Xorg radeon driver and 8.02 under Ubuntu. I'll trade that increase in performance for a lack of Compiz functionality any day. As another example, I can play two movies simultaneously (one with VLC, the other with totem) and chew up only 25% of the processor load on my system. I'd be lucky to get that level of performance with just one movie on a stock installation. And of course Google Earth runs smooth as silk.
Over all I'm quite happy. But your mileage may vary.