I recently hooked my laptop to two monitors. Ubuntu successfully detected both monitors but the second monitor was a mirror image of the first instead of an extension. I peeked around on Ubuntu Forums and Google. There was much talk about installing drivers such as Xinerama, Twin View, MergedFB, BigDesktop, etc. Numerous frustrated posts.

To my frustration, none of the drivers worked and I decided to do a clean install of Ubuntu 8.10. Then I simply went into System > Preferences > Monitors and unchecked the option "Same image on all monitors". You can also drag around the desktops to fit your needs, set different resolutions, etc.

This simple solution worked perfectly for me. My advice, try this before you attempt to change display drivers.