Your card should run open GL fine. It is likely that you need a driver that
will manage this. Go to System, Administration, Hardware Drivers and see if
they have a recommended restricted driver. If so, install that. It should
enable Blender to run. Depending on whether the driver needs to be compiled
or not, you may have to re-boot to take advantage of it. If it is
pre-compiled it should work fine as is.

If not, and this is a possibility if ATI has not improved with driver
support, you may have to compile your own. This is simplified by EnvyNG
which is in the repositories. I am not sure how well it works for newer
cards. It is great for old ones. You could also try the ATI site.

As of 9.04, Ubuntu shipped with a kernel that handles much of the graphics
chores instead of relying on xorg. This made existing xorg drivers obsolete.
ATI and Intel were late in supplying new drivers. I am not sure if there is
a backlog. Mine is NVidia and it has never given me a problem. If all else
fails then you can install the Nvidia and hook your monitor up to it. You
don't have to remove the old card. My computer has two cards and it works
fine.