Following a developer meeting this week, the decision has been made to leave Xserver 1.4 out of 7.10 Gutsy Gibbon and then include it in Ubuntu 8.04, in what is currently another eight months away. The reason behind abandoning Xserver 1.4 is that it won't be released until after the Ubuntu Gutsy feature freeze, but at the same time the development version (Xserver 1.3.99) is already available.
No big loss if they don't integrate the new drivers - they're pretty easy to install (after the 5 time or so ). I think though because dell is pushing for better ATI driver support for they're ubuntu systems, Ubuntu just might integrate the.