I downloaded the driver only for the HD4850, removed the old one, rebooted my machine, installed the new v8.7 driver, rebooted, went into device manager and STILL have the previous driver!
When I upgraded from 8.6 to 8.7 I had the same problem.
Search on Google with show that many people have the same problem.
Soluition.
Go into SAFE mode.
Completely unistalle device, drivers all *ATI* files and any other folder that may have an ATI file.
I ran CCCleaner and Driver SWeeper too. That killed the old drivers then did a fresh install with 8.7 and my HD4850 worked much better. Even was able to play Prey in Open GL. Before I couldn't.
Hm...I'm wondering about something. If you go into your device manager and click on your display adapter, what is the driver version number and date that you see there? I was expecting that to read "v8.7" with the release date (which was 7-22 iirc).