Apple's new OS X 10.7 has a number of enticing features and seems to run well on many systems; however, after about a month of Lion being out in the wild, there are several prominent issues affecting some Mac users running Lion that seem to all revolve around the management or processing of graphics.
The first issues are with MacBook Pro systems (specifically the 2010 models), where it seems a bug results in kernel panics when performing specific video-processing tasks, be it the movement of a window, or the editing and management of a graphics file. The systems will display a kernel panic message that mentions a "NVRM Read Error" and references some IO and graphics kernel extensions in the backtrace, suggesting the graphics systems are the root of the issue.
In addition to freezes and crashes, these systems also appear to be suffering from a black-screen bug that while present for some users before upgrading to Lion, has definitely increased in prevalence after users have upgraded their systems. This issue generally seems to happen when people wake their systems from sleep, and, as with the freezing and crashing on these models, appears to be related to the management of GPU switching on these systems. Turning off GPU switching by using a tool like gfxCardStatus to specify a graphics card to use seems to have helped some affected users.
Another prominent problem seems to be affecting iMac systems, where the handling of video files results in the entire system freezing, with only the mouse cursor being responsive. Numerous iMac users have reported this issue happening on a rather lengthy and growing thread on the Apple Discussion boards. Unfortunately there seems to be no workaround for this issue so far, as people have tried everything from reinstalling the OS, to resetting hardware settings like the SMC and PRAM.
Lastly, Mac Mini users seem to have troubles with managing HDMI output from their systems, where the connections do not always work and need to be unplugged when restarting the system if they want the HDMI output to work properly when the system next boots up.
The affected MacBook systems are running dedicated Nvidia graphics combined with Intel HD onboard graphics processors, suggesting the issue had to do with the Nvidia drivers in the system; however, affected iMac and Mac Mini systems are running both Nvidia and AMD chipsets, so the graphics problems in Lion are not specific to a given driver or hardware configuration.
Apple is looking into the graphics problems that have surfaced in Lion, but if you have upgraded to Lion and these graphics problems are affecting your workflow, then for now the only real workaround to helping the situation is to downgrade to Snow Leopard and wait for Apple to address these problems. Some situations like the Mac Mini HDMI problem seem to only happen at restarts and therefore can likely be managed, but there does not appear to be a workaround for iMac system freezes, so in these cases an OS downgrade is warranted.
To perform a downgrade, you can either format your system and reinstall Snow Leopard, or you can format and restore your system from a Time Machine backup. Either way, be sure when you format that you partition the drive using Disk Utility (available in the Snow Leopard installer's "Utilities" menu) and set it to have one partition, as doing this will remove the recovery partition that Lion installs on the system. Be sure to back up your system before performing the downgrade, and if you cannot restore from a Time Machine backup (that will contain your installed applications and account settings), then be prepared to reinstall your applications and set up your accounts again.
If you do have a Time Machine backup of your Snow Leopard installation, then you should be able to get up and running faster by restoring it, and then accessing your most recent backup created in Lion to copy any new files to your reverted system.
These video-related problems do not affect all users, but enough are affected for this to be a pretty significant issue. Hopefully Apple will address these video problems soon in an upcoming OS update, since for some users these problems make it impossible to use their systems.