yes, the proprietary drivers are very bad. Actually, they've been responsible for 100% of freezes I've experienced on Ubuntu for the last two years since I got my Radeon HD5850. But luckily, the open drivers are now very good. They are much faster than the proprietary drivers, very much more stable and they seem to provide a similar set of features. Since they're open, you also don't need to update them manually anymore.

In 11.04, I have had a few minor draw issues with it in Unity, but except for that, it's been very good and stable. In 11.10, which goes into Beta 1 tomorrow, I haven't had a single issue. I've been told that AMD now has people working full time on the open driver. I haven't been able to verify that, but the rapid progress they've suddenly made, makes that seem probable. It's a very good thing if it's true, because they make really good hardware, and it's been very annoying that they've had so poor drivers. The bonus for us users of Ubuntu, is that it makes new releases of Ubuntu feel extra fast and good :)

By the kernel, you seem to be running 11.04 and I would strongly recommend that you try using xserver-xorg-video-radeon instead of the proprietary drivers. The issues I've had are very small. Some white dots on the dash is all. This is based on my experiences with the Radeon HD5850, of course, but I've been told that other cards in the 5-series, as well as newer cards also work very well. I'd appreciate it if you leave a comment with your experiences. I'll also add the 11.04 tag to your question to make it easier for others to find your question.

Update: no doubt, Unity will provoke more driver problems than Ubuntu Classic, since it makes much heavier use on Compiz. I personally could never get the proprietary drivers to work well with Unity. The open drivers also caused some issues, but they were minor compared to the ones caused by the proprietary drivers. I've never had crashes like you've had though. I've had to re-run compiz in order to fix minor issues, but nothing worse than that. But we don't have exactly the same hardware, so... What I can say, is that it's improving and that in Oneiric, I have no issues at all. So, all in all, it seems to me that AMD is making large improvements in this area.