Comment 9 for bug 540547

Just in case anyone reads this and has the same problem, here is a workaround:
Edit /etc/modprobe.d/radeon-kms.conf and insert/change the line
options radeon modeset=0
This restores the "old" behavior of the driver as in Ubuntu <= 9.10 (working tty's, reasonably fast, compositing only with xrender, not with opengl).

When the bug is eventually resolved, change it back to options radeon modeset=1

Patrick