I have the exact same problem!
I was beginning to think I was the only one.
To recap my problem:
After a few minuets of game-play (2-5 min) the ground rises up to about waste level. I can move freely, but all characters and game objects appear to be half-burred.
When I pan the camera below the ground, everything apears suspended in nothing.
If I save the game and re-load everything is normal for a few minuets then the bug re-appears.
If I alt-tab to the desktop the bug goes away, but only for a matter of seconds.
I have a steam copy of the game. I've re-downloaded it three times.
I've adjusted every setting, including using windowed mode, to no avail.
I've re-installed steam.
I've re-installed my ATI driver (11.6)
I've re-installed windows.
My system specs in brief:
Windows 7 64
Asus P6T Deluxe
Core i7 920
6Gb RAM
ATI 6870 HD
I've not overclocked.
Video of the bug