X.Org Server 1.9 isn't as significant of a release as some past X milestones, but it's great to see this newest release being pulled in now as opposed to another Ubuntu version that's shipping an already dated version of this critical desktop component. X.Org Server 1.9 carries some DRI2 fixes, RandR 1.4 with this extension update having per-CRTC pixmap support, X Input 2.0 performance improvements, code clean-ups, and lots of bug-fixing. X Server 1.9 will be part of the X.Org 7.6 release.
Upgrading to 1.9 from 1.8 breaks both the graphics and input drivers ABI, which will require all of Ubuntu's X.Org drivers to be rebuilt as they will not otherwise function when the xorg-server 1.9 push occurs. NVIDIA's binary driver is compatible with X.Org Server 1.9 and ATI's Catalyst driver that is usually months behind in supporting X.Org Server updates should actually work with the 1.9 release at this point.
Confirmation of this X.Org Server 1.9 transition for Ubuntu 10.10 can be found on ubuntu-x. While Ubuntu 10.10 is shipping with the latest stable kernel and X.Org Server, sadly it's still looking like it will end up shipping with Mesa 7.8.x rather than Mesa 7.9, which should be out by the end of September but the current Git master code is stable enough for pulling.
Mesa 7.9 features many Gallium3D driver improvements particularly with the R300g driver becoming in great shape while the LLVMpipe and Nouveau drivers are also bettered, core Gallium3D improvements like MSAA support and geometry shaders, classic Mesa DRI driver improvements, support for more OpenGL extensions with their work towards OGL3 capabilities, and a new GLSL compiler, among tons of other changes for this open-source 3D stack.