It is likely that a kernel upgrade made the driver not work and it defaulted
to a vanilla driver. To get compositing to work then you will likely have to
re-install the proprietary driver and re-boot. You may not have to re-boot,
if the driver is unchanged, but if it is changed then you will have to
re-boot to use it. You will know if you do this from Hardware Drivers
(called Additional Drivers in Maverick) if it gives you the re-boot symbol.
If you do it from Synaptic or Software Centre then you won't see it.

The reason why this happens is that a kernel module is made when you install
the driver. A new kernel would not have this module. You could also try
booting into the previous kernel and it would likely give you desktop
effects, but it is a pain to do this every time you boot.