You could use the open source ATI drivers.
In intrepid your card will even have 3d acceleration with the open source, I have my x1950 running compiz etc perfectly on a 24" and 19" extended desktop (3200 x 1080).
Try out intrepid Ibex before binning ATI.

BTW I had the fglrx drivers suspending and hibernating before with no issues so it could also be another piece of hardware giving you issues!