This question came up in the late stages of writing my Radeon X1000 series review, and I just got confirmation from ATI yesterday. Turns out that the vertex shaders in the Radeon X1000 series GPUs don't support a notable Shader Model 3.0 feature: vertex texture fetch.
As it sounds, this capability allows the vertex shaders to read from texture memory, which is important because texture memory is sometimes treated as general storage in programmable GPUs. Vertex texture fetch is useful for techniques like displacement mapping, where the vertex and pixel shaders need to share data with one another.
TechReport
TechReport