I've seen this problem recurring with other ATi card owners, and having recently purchased ArmA 2, hae been experiencing them myself.
Basically, big walls of colour will appear, generally originating from the centre of the screen. Usually it only happens on foot or on ground, and much more frequently in urban landscapes.
This thread shows a similar bug:
http://forums.bistudio.com/showthread.php?t=73235
As does this video:
http://www.youtube.com/watch?v=imN3xa0sZxU
Both have ATi cards, but newer ones than me. Mine's a Radeon X1650 Pro.