If the Official ATI drivers aren't working out try:
http://www.omegadrivers.net/
These are optimized driver and usually contain more features than the ones released officially by ATI. Just be careful if you choose to play around with overclocking and advanced tweak settings... RTFM
When a game appears choppy like you describe, it is usually caused by something accessing the disk whether it be a steam update messing with your savegames or your virus scanner running in the background. This is of course, assuming that your connection is not lagging.
Anyway, it's probably a bug with the latest update, so expect another patch to fix that eventually. Valve likes to do their QA testing on their customers
.