Following a developer meeting this week, the decision has been made to leave Xserver 1.4 out of 7.10 Gutsy Gibbon and then include it in Ubuntu 8.04, in what is currently another eight months away. The reason behind abandoning Xserver 1.4 is that it won't be released until after the Ubuntu Gutsy feature freeze, but at the same time the development version (Xserver 1.3.99) is already available. Xserver 1.4 is what X.Org 7.3 will use. Dependent upon X.Org 7.3 is also Ubuntu's displayconfig-gtk and their bullet-proof-x. Unless the Ubuntu developers decide to make an exception or extend their feature freeze, Xserver 1.4 is out of the question for Ubuntu users until next year. Mark Shuttleworth frequently talks about wanting the major open-source projects to coordinate and schedule their release cycles with one another, but it doesn't look like Mark wants to play ball on this one by adjusting the Ubuntu 7.10 "Gutsy Gibbon" release cycle so late in the game.
The Ubuntu blueprints for X.Org 7.3 and Bryce Harrington's mention of Xserver 1.4 not until Gutsy+1 can be read on the Launchpad. Ubuntu 8.04 LTS may end up getting X.Org 7.4 with Xserver 1.5.