If you use the default setup in lenny there should be no reason to upgrade. I have 2 machines here running lenny + ati cards, (4870 + 2600xt) and they both just work. 64 and a 32bit respectfully.
All I do to install the driver is ./ati-driver-installer-xxx.run with no arguments.
that did not solve anything! The only thing that happend was that you installed a newer driver and then rebooted. Because the old module was active and you did not go with my script in first place you had problems. You can only unload fglrx or radeon+drm module when X server is shut down.