[praka123]

^ it asks for Xorg version:7.2 .are u using feisty?
I think feisty ships with xorg 7.2.
I too have one installed and Xorg version is:

prakash@ubuntu:~$ Xorg -version

X Window System Version 7.2.0
Release Date: 22 January 2007
X Protocol Version 11, Revision 0, Release 7.2
Build Operating System: Linux Ubuntu
Current Operating System: Linux ubuntu 2.6.20-15-386 #2 Sun Apr 15 07:34:00 UTC 2007 i686
Build Date: 04 April 2007
        Before reporting problems, check http://wiki.x.org
        to make sure that you have the latest version.
Module Loader present

For ur problems and doubts reading:
http://ubuntuguide.org gonna sure helps.
Do u regular upgrade ur packages?
Also I think u can install Ati drivers from apt-get.
i think its linux-restricted packages.
In the menu, System>administration there is some restricted drivers manager.try it.
if not try xorg-fglrx:

Video driver for ATI graphics accelerators
Video driver for the ATI Radeon and FireGL graphics accelerators.

This version of the ATI driver officially supports:

* FireGL: V7350, V7300, V7200, V7100, V5200, V5100, V5000, V3400,
V3300, V3200, V3100, X3-256, X3, X2-256, Z1-128, T2-128,
X1-128, X1-256p
* FireMV: 2200 (Single card PCI-e configuration)
* Mobility FireGL: V5000, T2
* Mobility Radeon: X1800, X1600, X1400, X1300, X800, X700, X600, X300,
9800, 9600, 9550, 9500
* Radeon Xpress: 200M series, 1250 IGP, 200 series
* Radeon: X1900, X1800, X1600, X1300, X850, X800, X700, X600, X550,
X300, 9800, 9700, 9600, 9550, 9500

ATI All-in-Wonder variants of the above cards/chips are also supported,
but video capture is not

Use Synaptic package manager(System>administration>) to install.
do u want my vanilla /etc/apt/sources.list
posted here?just reply
also u can make ur own repository list using source-o-matic.