mainesysadmin.com

Finally I found a few instructions which made this configuration easy and smooth.

http://www.chr05210084.com/content/install-compiz-fusion-ubuntu-gutsy-using-ati-video-card

1. Enable fgrlx driver.
Install linux-restricted-modules and restricted-manager provied in the restricted repositories:
sudo apt-get update
sudo apt-get install linux-restricted-modules-generic restricted-manager

Open the restricted drivers manager in “System -> Administration -> Restricted Drivers Manager” and select “ATI accelerated graphics driver”.
2. Install xserver-xgl package

sudo apt-get install xserver-xgl

3. Install compiz

sudo apt-get install compizconfig-settings-manager compiz compiz-core compiz-fusion-plugins-main compiz-fusion-plugins-extra compiz-gnome compiz-plugins libcompizconfig-backend-gconf libcompizconfig0

4. Reboot
5. Log in. 3D effects should be enabled!