Here's another bug report with more information. I've set DISPLAY and XAUTHORITY environment variables accordingly and more information has been gathered.
I'm still using driver version 295.33, the most up to date "stable" version as of now.
It may be worth mentioning that this X hangup problem is not new for me. It started after a driver update sometime around last summer I think. I was using a Knoppix live CD at that time. I don't remember the last functional driver version , neither do I remember the precise symptoms, but it looked the same, i.e. systematic hangups at startup.
Could this bug
be related ?