I understood that the Unity desktop in Natty uses Compiz and therefore requires a graphics card driver that support composition effects. Does this mean if I have an ATI or NVIDIA card I'm forced to install a proprietory driver because the open source drivers for those cards do not support Compiz?
I believe Unity requires 3D graphics. So if there is an open driver that can do that, you don't require proprietary drivers.
Looking a the status of the FLOSS nouveau drivers, currently you probably would need the proprietary drivers for NVIDIA, however, they are working on the necessary features.
For people who use older hardware or have driver problems the Unity 2D interface will be available in 11.04 (and in a PPA for 10.10)
I have an ATI card, and Unity/Compiz works fine for me with the open drivers in natty, although I'm sure that depends on the state of the drivers for your particular card. If your card supports compiz with the open drivers than it should also support unity.
There is a (impressively long) list of ATI cards with open-source 3D acceleration at https://help.ubuntu.com/community/RadeonDriver
The requirement for Unity is that the graphics driver should have 3D support.
Nvidia cards would need the proprietary driver since the open source driver doesn't support 3D.
I have a laptop with Intel chipset
945GM which has open drivers for graphics. It also supports 3D.
The answer is - Unity needs 3D support. If your card has FOSS driver which support 3D, then you are fine, otherwise you need to install proprietary drivers
Currently I am running Natty with Unity 3D on an Nvidia card using the provided experimental 3D FOSS drivers. No issues aside from my cards fans spinning faster.
If the quality of the driver at least stays the same you will not need properitary for Nvidia cards.
The nvidia-current driver does not yet support the new Xorg anyways.
The answer is No: Compiz will be happy as long as your free/libre/open source driver has -- even experimental -- support for 3D acceleration. My dad has an AMD K7 box w/ GeForce2 MX 400 (nv11). I just ran a natty live session on it and Compiz nicely showed me all the desktop effects (The "try Ubuntu" button did choose the fallback Gnome desktop for me though...)