ATI Graphics Cards are wonky with Second Life. I've had good and bad results with drivers and different versions of SL.
For example I currently am having issues with both the latest version of SL (3.2.4.246439) and the latest version of the ATI drivers for my video card.
I have an ATI HD5670 with ATI drivers 8.841.0.0 dated 4/5/2011. When I installed the new version of SL I got all kinds of phantom artifacts around my avi when she moves. So my first instinct is to upgrade my video drivers.
I update my video drivers to version 8.920.0.0 dated 11/9/2011. All of a sudden my FPS goes to about 2.0 / sec.
Then I revert both my SL version back to 3.2.1.244864 and my drivers to 8.841.0.0 and I get back to about 15 fps at very crowded Hotlanta.
My last thought was to update my video drivers again without updating SL and I my FPS was back to two.
So what I've deduced is...
1. The new ATI drivers for my video are crap for SL use.
2. To use the latest version of Linden Labs Viewer I need to update to the latest crap drivers to remove the artifacts.
3. I'm not doing any of that and will stick with the older version of SL and graphics drivers for now.
I find it interesting that my computer works great with every 3D application I can put on it... but Second Life. And I'm paying for this?