xorg.conf looks fine to me. I used aticonfig tool to set it up. Please, have a look:
[root@float ufoai]# cat /etc/X11/xorg.conf
# XFree86 4 configuration created by pyxf86config
Section "ServerLayout"
Identifier "Default Layout"
Screen 0 "aticonfig Screen 0" 0 0
InputDevice "Mouse0" "CorePointer"
InputDevice "Keyboard0" "CoreKeyboard"
EndSection
Section "Files"
# RgbPath is the location of the RGB database. Note, this is the name of the
# file minus the extension (like ".txt" or ".db"). There is normally
# no need to change the default.
# Multiple FontPath entries are allowed (they are concatenated together)
# By default, Red Hat 6.0 and later now use a font server independent of
# the X server to render fonts.
RgbPath "/usr/X11R6/lib/X11/rgb"
FontPath "unix/:7100"
EndSection
Section "Module"
Load "dbe"
Load "extmod"
Load "fbdevhw"
Load "glx"
Load "record"
Load "freetype"
Load "type1"
Load "dri"
EndSection
Section "InputDevice"
# Specify which keyboard LEDs can be user-controlled (eg, with xset(1))
# Option "Xleds" "1 2 3"
# To disable the XKEYBOARD extension, uncomment XkbDisable.
# Option "XkbDisable"
# To customise the XKB settings to suit your keyboard, modify the
# lines below (which are the defaults). For example, for a non-U.S.
# keyboard, you will probably want to use:
# Option "XkbModel" "pc102"
# If you have a US Microsoft Natural keyboard, you can use:
# Option "XkbModel" "microsoft"
#
# Then to change the language, change the Layout setting.
# For example, a german layout can be obtained with:
# Option "XkbLayout" "de"
# or:
# Option "XkbLayout" "de"
# Option "XkbVariant" "nodeadkeys"
#
# If you'd like to switch the positions of your capslock and
# control keys, use:
# Option "XkbOptions" "ctrl:swapcaps"
# Or if you just want both to be control, use:
# Option "XkbOptions" "ctrl:nocaps"
#
Identifier "Keyboard0"
Driver "kbd"
Option "XkbModel" "pc105"
Option "XkbLayout" "pl"
EndSection
Section "InputDevice"
Identifier "Mouse0"
Driver "mouse"
Option "Protocol" "IMPS/2"
Option "Device" "/dev/input/mice"
Option "ZAxisMapping" "4 5"
Option "Emulate3Buttons" "yes"
EndSection
Section "Monitor"
Identifier "Monitor0"
VendorName "Monitor Vendor"
ModelName "LCD Panel 1024x768"
HorizSync 31.5 - 48.5
VertRefresh 40.0 - 70.0
Option "dpms"
EndSection
Section "Monitor"
Identifier "aticonfig Monitor 0"
EndSection
Section "Device"
Identifier "Videocard0"
Driver "vesa"
VendorName "Videocard vendor"
BoardName "VESA driver (generic)"
EndSection
Section "Device"
Identifier "ATI Graphics Adapter 0"
Driver "fglrx"
BusID "PCI:1:5:0"
EndSection
Section "Screen"
Identifier "Screen0"
Device "Videocard0"
Monitor "Monitor0"
DefaultDepth 24
SubSection "Display"
Viewport 0 0
Depth 16
Modes "800x600" "640x480"
EndSubSection
SubSection "Display"
Viewport 0 0
Depth 24
Modes "1024x768" "800x600" "640x480"
EndSubSection
EndSection
Section "Screen"
Identifier "aticonfig Screen 0"
Device "ATI Graphics Adapter 0"
Monitor "aticonfig Monitor 0"
DefaultDepth 24
SubSection "Display"
Viewport 0 0
Depth 24
EndSubSection
EndSection
Section "DRI"
Group 0
Mode 0666
EndSection