Now I’ll have to admit I’m gonna do little bit of stealing… or copy/paste. Anyway this works:
This is a really easy way to get it working. I have a Dell Optiplex GX620 with a ATI graphics card. The card can support a dual monitor setup.It turns out that ati have supplied a program (aticonfig) that inspects your current xorg.conf file and then changes it to allow for dual monitor setup.
Here is what you do in a terminal window :
sudo aticonfig –initial=dual-head –screen-layout=left
You may want to change the left to be right, dependendant on where your main monitor is (monitor 0).
As I have two monitors that support diffrent resolutions, the setup was using 1024×768 on both screens and I could not drag windows accross screens (I could drag the mouse 
To address the dragging window issue, I did this after I executed the first command :
sudo aticonfig –dtop=horizontal, reverse –overlay-on=1
If you look at the help page for aticonfig, you will see that dtop can take different parameters. Because my second screen was to the left of monitor 0, I had horizontal, reverse But if it was to the right I would have used horizontal only.
To address the screen resolution do this (please see note)
sudo aticonfig –resolution=0,1600×1200,1280×1024,1024×768
This now sets my monitor 0 to be able to support 1600×1200 resolution. My smaller monitor (monitor 1) will use 1024×768, which is what I want. You can simply change where it says 0 to be 1 This will now change monitor 1.
Now simply restart gdm to see the effects. Or if you can’t do that, just restart the machine.
Note
Before you start changing the resolution, you need to know which is defined as monitor 0. As in my case monitor 0 supports a higher resolution then monitor 1. The easy way to find this out is to do the first two steps, start up and then the monitor with the menubar on top of it is monitor 0. If it is not the monitor you wanted, you can simply swap around the vga cables that go into the back of the video card
There is a way to do it by editing the xorg.conf, but this is supposed to be a simple way of doing it
I hope this helps someone!
Source:
http://hamzakc.wordpress.com/2006/10/16/dual-monitor-setup-ubuntu-ati/
I did only 1 thing after this. Go to system/preferences/resolution and change it to 2560×1024.
EDIT From ubuntu forums:i
!! This reply was sent to a wrong thread. Proper thread is http://ubuntuforums.org/showthread.php?t=328751
It’s not necessary to disable the boot splash. Try following:
Install hwinfo with synaptic and then type in a termial
sudo hwinfo -- framebuffer
You’ll get a list of supported values. Write down one of the values with 32bit extension. Open the menu.lst
sudo gedit /boot/grub/menu.lst
and search for
#defoptions=quiet splash
Add to this line vga=value where value is to replace with the value which you have write down (0×0366 for example). !!Please do not remove the “#” before defoption!!
Save the file and close it.
Update grub
sudo update-grub
and then reboot.
This will solve the issue. Alternative you can add vga=792 in the defoptions=….-line.
Note: The value which you have insert in menu.lst will change the resolution of the splash screen and the VT. For me worked 0×0366, this give a resolution of 1600×1050 for both VT and splashscreen on an ATI X1400. It may possible that the splash screen is not centered on the screen or the aspect ratio get wrong.
A possible solution is to type in a terminal:
sudo update-initramfs -u -k `uname -r`
See also https://launchpad.net/ubuntu/+source/usplash/+bug/63558
Best regards
Frank