Update: AMD sent along a clarification of the various issues Nvidia raised regarding AMD's drivers:
"We actually moved our DirectX 9 hardware to a "legacy driver" status back in March 2009, and we were quite open about this move" [[ed: News to us]]. We've been providing updates to this driver on a quarterly basis - ironic considering the fact that we are offering more frequent updates of our "legacy" driver than some companies do of their "current" drivers. In fact we will be posting a new legacy driver in the next few days.
Also, as you probably well know, WDDM1.1 (Windows Display Driver Model) is the driver architecture required to run Windows 7. To meet Microsoft requirements, GPU's must be DirectX10 and later level hardware. As stated on our website, Windows 7 users with DirectX 9 AMD graphics hardware can use the legacy Windows Vista WDDM 1.0 drivers (as it is not possible for DirectX 9 hardware to support the WDDM 1.1 driver requirements)."
Ever-helpful Nvidia sent us an e-mail this morning with a few updates regarding Windows 7 and AMD's older 3D cards. Some of AMD's old cards are cut-off from official Windows 7 support altogether, and others are missing out on a few of Windows 7's more-advanced features. Before we accuse AMD of abandoning its customer base, we thought we'd try to track down just how many customers will be affected by this news.
The numbers for the Windows 7 cut-off issue are difficult to track down due to the age of the cards involved. As announced in a support update on its Web site, AMD plans to move its pre-DirectX 10 graphics cards to legacy status. That means AMD will no longer update the software drivers for 3D cards from its Radeon HD 1000 series or older. You can try using the most current Vista-compatible driver for those cards in Windows 7, or try to find a user-made driver, but AMD won't be able to provide you with support.… Read more