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I have just done my first site for 1024x728 and the new space was so refreshing. It is for a design company, so we figured they could get away with being a little un-conventional. If you can argue that the extra space is needed, then go for the larger size.

However, most people I know tend to stick to 800x600 for now. That really only leaves 700x420 pixels of useable space once you have taken into account all the rubbish on the screen.
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