Graphics Card

2D graphics works out-of-the-box with XFree 4.2, XFree 4.3 and XFree 4.3.99 (CVS)
For 3D acceleration you can choose between the OpenSource DRI driver
and the closed source ATI binary driver. The ATI driver is a little bit faster than
the DRI driver with 1200fps against 800fps in glxgears.

DRI Configuration:

You'll need to enable AGP support for ATI Radeon and Intel in your kernel for
3D support using open source DRI drivers.
Then you'll need to upgrade XFree to 4.3.99 and use the driver "radeon".

Files of interest: XFree86.log XF86Config-4 Kernel .config

ATI Driver Configuration

The ATI driver can be downloaded from here
Since i am using Debian which doesn't use the RPM manager, i've build a .deb
which you can find at the end of this paragraph.
The driver package replaces libGL.so, so you'll have to use the
--force-overwrite parameter of dpkg to install it.

The last step is to compile the kernel DRM module. I've you have installed
my .deb you'll find it in /usr/src/patches/generic-2.6/addon-drivers

Files of interest: XFree86.log XF86Config-4 ATI binary driver for Debian

To run X in the best possible resolution (1400x1050) you'll have to edit
the XF86Config-4 file by hand and add the new resolution:

SubSection "Display"
        Depth           24
        Modes           "1400x1050" "1280x1024" "1280x960" [...]
EndSubSection

And that's the result:

Files of interest: XF86Config-4