Yes, uninstall the Windows Update Driver that was installed for ATI. And then set windows updates to only install High Priority updates and manually install recommended. Any drivers that come out, just hide them, and never use windows Updates to install drivers. I like windows, but the windows updates drivers are almost always horrible.
Uninstall through Add/Remove
Reboot
Open Device Manager and if the ATI video drivers remain, right click and uninstall from there
Select to remove files if prompted.
Reboot
You should now have a generic driver listed, if not, don't worry about it at this point and...
Install the latest ATI drivers from ATI's website.
If you still ahve problems, then it is not a video driver issue.
Also,
If you had only just installed 7 and everything, give it a couple of days to calm down.
7 may run sluggish for a day or 2, it's normal and will right itself.