The ATI drivers seemed to work fine with the new KWin and desktop effects in Kubuntu 10.04, I just didn't like having half of my Wine games not working.
My theory is that it's probably half ATI's fault, and half due to the fact that the Wine code is still in need of heavy development. I wouldn't blame the Wine developers if all they owned were nVidia cards (and therefore only tested/wrote-to the nVidia implementation of OpenGL), because for years the ATI proprietary drivers performed so relatively poor as far as speed goes.
There are now open source drivers for both ATI and nVidia cards, but those are in such an early state that the 3D support is basic and slow. So, for now, the best advice for anyone buying/building a system where they might want to run Linux and 3D is still to go with an nVidia card (and use the proprietary nVidia driver).