I have the same problem going on, except with a ATI Radeon XPress 200M. I can get some limited success for a time if I go into the config screen and force the game to reset the resolution to something different -- then it happens again and I reset it again. Eventually the game will crash to desktop if I do this too many times. I've played with the graphics driver settings, and it is the latest version. The shader check program included from 3000AD approves of the card.
Anyone have any ideas?