I don't know any easy way to fix your display problem, which I've also had
from time to time. Sometimes one just has to move on (regretfully) to a
different distribution. This isn't commercial software and video display
drivers seem to be a weak spot.
I've found even beta 'Lucid' (10.04) works better for me than release
'Karmic' (9.10).

I'm not sure what the commercial vs non-commercial has to do with it,
since I've seen an awful lot of crappy commercial software - but I
suppose you could buy support for an ubuntu LTS release and then you'd
have your commercial software.

You mentioned regretfully moving to a different distro - which one? Is
it commercial?

Also, you mentioned that it works better for you in 10.04 alpha -
wouldn't that be worth trying? Since it will be an LTS release, one
would expect that to be well supported. It's certainly working well
enough for me...

Just for grins, have you tried booting up with an ubuntu 10.04 alpha CD?
The final release is due out next month, and if it works that would be
the easiest fix.

I had the same problem : 800*600 only on a new laptop and I searched in the
laptop hardware description to find the brand name of the video card and chips
then I googled that brandname and eventually could download the specific drivers
from the manufacturer web pages. It was not too hard to do and now it works
perfectly, my laptop is Windows XP - Ubuntu Karmic 9.10 dualboot but I mostly
use it on Linux as I am much more satisfied with Ubuntu.