Haven't used ATI's open source driver on their newer hardware, but I can tell you at the rate they are making progress nVidia is going to be in a world of hurt on the Linux front pretty soon.
There have been promises of decent ATI drivers "just around the corner" for many, many years now.
ATI's new documentation effort is fantastic and my last-but-one card was a 4780 based on a desire to reward OSS-friendliness and the promise of decent drivers. I struggled with driver hell for 2 years, unable to do decent compositing, watch tear-free video or even play UT2004 (yes a 7-year-old game) at a smooth frame rate. It was a truly shoddy experience and I understand that the ATI Linux drivers had improved massively to even get to that point.
At that time I think nVidia were having some 2D performance issues of their own but I'm not aware of ANY point in time where their drivers have been less than 'excellent' in comparison to the ATI ones.
So if I learned anything from that experience, it was to make your purchasing decisions based on NOW, not on "pretty soon" or "maybe". I gave that ATI card to a Windows-using friend and will continue with nVidia until they either get bought out by Microsoft or finally get some competition on Linux. It'd be great but I'm not holding my breath.