First off, kudos to ATI for embracing DRI

Second off, thanks for not telling anyone about the new vsync setting (not in the release notes afaik)
Starting with fglrx-8.16.20, you can now use the xdriinfo command. Lets ask the fglrx driver what options it has
Code:
uberpc roy # xdriinfo options fglrx
<driinfo>
<section>
<description lang="en" text="Performance"/>
<description lang="de" text="Leistung"/>
<option name="swap_on_vblank" type="bool" default="false">
<description lang="en" text="Synchronize buffer swap with vertical blank"/>
<description lang="de" text="Synchronosiere Pufferwechsel mit vertikalem Rücklauf"/>
</option>
</section>
</driinfo>
Weeeeeee - the vsync setting!
Now lets create /etc/dirrc or ~/.drirc to change it!
Code:
<driconf>
<device driver="fglrx">
<application name="all">
<!-- Always synchronize with vertical refresh to avoid tearing -->
<option name="swap_on_vblank" value="true"/>
</application>
</device>
</driconf>
Now you can remove that nasty 'Option "Capabilities" "0x00000800"' line from /etc/X11/xorg.conf
All done
NOTES: Why is this better than xorg.conf? You can change settings on the fly, no need to reboot or restart X or the PC. Also these settings are per device, per screen or per application or a combination of all 3. Note the per application bit - suck that Windows users! Hopefully ATI can put ansio and fsaa settings there too
Why vsync? Because my system is fast enough not to need it and LCD without vsync looks awful!