Open up the file Planeshift3D/data/config/r3dopengl.cfg in a text editor, and find this line:
Video.OpenGL.FontCache.UseMultiTexturing = yes
and change yes to no.
Figures the easy fix would not work for me.
I've also tried updating my ubuntu drivers to fglrx and that only killed my desktop effects.
I couldn't even get mesa updated it just crashed my machine. This is very frustrating!