Actually, the problem isn't with X, it's with the closed source ATI and nVidia drivers. If you install the ATI or nVidia proprietary driver then you'll need to reinstall it any time there is a kernel update. The last round of updates installed a new kernel so anyone running the ATI or nVidia drivers will have problems after the update.
If you enter the "dpkg-reconfigure -phigh xserver-xorg" command you will probably lose any 3D accelleration and special configs for Beryl, etc.
Exit out of the xserver error notice and hit Ctrl+Alt+F1 and log in to the shell. Once in the shell enter the following commands:
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sudo cp /etc/X11/xorg.conf /etc/X11/xorg.conf.backup
sudo envy -t
and install the appropriate driver. After envy has finished reboot the computer, and if you still have problems restore your xorg.conf file with:
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sudo cp /etc/X11/xorg.conf.backup /etc/X11/xorg.conf
Oh, and welcome to the world of closed-source drivers.
Aloha, Tim