To get my dual-screen setup working, I first used Xinerama, which worked, but had a (blocker, for me) bug that would distort the cursor.
I then tried MergedFB using the Radeon driver, and it was good. I could play games with the 3D accelerated screen, and the mouse was quite usable.
In the latest xserver release (1.3) MergedFB functionality has been deprecated by the robust RandR 1.2 (X-Windows Resize and Rotate). With this release, the X Server supports hotplugging, meaning a monitor will be automatically detected when plugging it in, and can be enabled without restarting the X session.
When I tried this, xrandr set up both monitors at their native resolutions, 1280×800 and 1680×1050, but mirrored the display instead of extending it. How did it mirror by using different resolutions, you ask? it overlayed the 1280×800 screen in the top-left corner of the 1680×1050 display. Funny, but not what I wanted 
The solution ended up being to disable the S-video out port on the video card explicitly, using xrandr --output S-video --off and then xrandr --output VGA-0 --right-of LVDS to extend the desktop onto the second monitor instead of mirror it.
It was also necessary to increase the size of the Virtual screen. So the only xorg.conf modification I made ended up being this:
Section "Screen"
...
SubSection "Display"
Virtual 2960 1050
EndSubsection
EndSection
Of course, other resolutions will vary in their required Virtual screen size.
A good reference is Intel’s xrandr 1.2 dual-head page here. Although it deals with the Intel graphics driver, the basic idea is the same for the radeon drivers.
Hi, can you post your full xorg.conf. I’m going nuts trying to get randr and dual head working on a X800pro with dual DVI-I connectors.
sure:
Section “Files”
EndSection
Section “InputDevice”
Identifier “Generic Keyboard”
Driver “kbd”
Option “CoreKeyboard”
Option “XkbRules” “xorg”
Option “XkbModel” “pc105″
Option “XkbLayout” “us”
EndSection
Section “InputDevice”
Identifier “Configured Mouse”
Driver “evdev”
Option “Name” “Logitech USB-PS/2 Optical Mouse”
Option “CorePointer”
EndSection
Section “InputDevice”
Identifier “Synaptics Touchpad”
Driver “synaptics”
Option “SendCoreEvents” “true”
Option “Device” “/dev/psaux”
Option “Protocol” “auto-dev”
Option “HorizScrollDelta” “0″
EndSection
Section “InputDevice”
Driver “wacom”
Identifier “stylus”
Option “Device” “/dev/input/wacom”
Option “Type” “stylus”
Option “ForceDevice” “ISDV4″ # Tablet PC ONLY
EndSection
Section “InputDevice”
Driver “wacom”
Identifier “eraser”
Option “Device” “/dev/input/wacom”
Option “Type” “eraser”
Option “ForceDevice” “ISDV4″ # Tablet PC ONLY
EndSection
Section “InputDevice”
Driver “wacom”
Identifier “cursor”
Option “Device” “/dev/input/wacom”
Option “Type” “cursor”
Option “ForceDevice” “ISDV4″ # Tablet PC ONLY
EndSection
Section “Device”
Identifier “ATI Technologies Inc M22 [Mobility Radeon X300]”
Driver “ati”
BusID “PCI:1:0:0″
Option “UseFBDev” “true”
EndSection
Section “Monitor”
Identifier “Generic Monitor”
Option “DPMS”
HorizSync 30-70
VertRefresh 50-160
EndSection
Section “Screen”
Identifier “Default Screen”
Device “ATI Technologies Inc M22 [Mobility Radeon X300]”
Monitor “Generic Monitor”
DefaultDepth 24
SubSection “Display”
Virtual 2960 1050
EndSubSection
EndSection
Section “ServerLayout”
Identifier “Default Layout”
Screen “Default Screen”
InputDevice “Generic Keyboard”
InputDevice “Configured Mouse”
Since you have 2 DVI ports, I think their names would be DVI-0 and DVI-1. So maybe
xrandr --output DVI-1 --auto --right-of DVI-0would work?[...] and Radeon driver 23 09 2007 update: The radeon driver no longer uses mergedfb, but randr for multiscreening. Xinerama was quite a suboptimal solution for my setup. What advantages does [...]