Ubuntu 8.10 has a different way of handling graphics drivers, since the more recent X.org server is trying to automatically juggle drivers instead of following the xorg.conf and has also removed support for some older legacy graphics cards[
1], so I don't know if it has anything to do with that. Are other programs that use 3D acceleration behaving as expected? Can you open the graal4console.log/F2 window and see if it mentions anything about hardware or software rendering?