I checked and it looks like version 8.634 of was the last certified ATI driver for windows. I think that is windows 7, vista business, and xp pro both 32 and 64-bit.

If you are running a different version you might want to try rolling back to that version and verify that the problem with snapping still exists. If it does then I am not sure what would be causing snapping not to work.

update: Well there is one thing other then gfx card drivers that dawned on me. I recently responded to someone that was having a similar problem and it turned out that his kid reprogrammed his mouses middle mouse button function. Do all the other middle mouse combo things work like grid (x) and vertex (v) snapping or middle mouse dragging things on the shelf work?